The value of dollar.

• Author: Downing, Gregory
• Position: Life in America

"How much money you make and how much 'stuff' kids get is far less important than making sure everyone is contributing to the family, and that children are learning the value of giving back to others and to society."

KIDS OFTEN are disconnected from the harsh economic realities that most adults struggle with. That partly is because parents shelter them from the truth, but also because grownups are not in reality about it, either. Many adults do not want to acknowledge that the world has undergone a fundamental shift. Everything about the way we build wealth and think about money has changed. Yet, we still are living--and yes, giving--like people who are able to work 40 years for the same company and retire comfortably with a gold watch.

In a way, we are just as spoiled as our kids. We all need to change our unsustainable ways, and that means breaking the paradigm of parents as beneficent providers and kids as passive recipients. It not only breeds an entitlement mentality, but an employee mindset--which will not serve kids well in the future.

Parents must teach their offspring the basics of entrepreneurship. Generating multiple streams of income (earned, passive, and portfolio) is the only logical path to financial freedom in a global economy where half of all college grads are moving back home jobless and saddled with debt. This is not to suggest we serve up a stern family lecture about the new fiscal reality along with the Christmas cookies and hot cocoa, but what we can do is minimize spending on gifts, concentrate on the togetherness aspect of the holidays, and, after the tree comes down, call a family forum.

What will you say to the family at that point? First off, be honest about your financial situation. Most families hide financial struggles from children to keep them from worrying. This is a mistake. While reassuring your kids that you will take care of them and you all will be okay no matter what, be straight with your children. They can handle it.

It is okay to say something like, "After Dad lost his job and took this new one, he makes half of what he used to. Also, we have to buy our own health insurance, and it is very expensive. We have a lot of bills to pay and we need to fund our retirement account. That means we all are going to have to cut way back on unnecessary spending."

Lay out the family finances in business terms. Your children probably have no idea how much you make, nor do they realize the cost of running a household. Between the mortgage; car payments; insurance; utility, food, and gas bills- and so forth--you are...