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Teaching Kids About Money Hard for Paycheck-to-Paycheck Parents

Parents in huge amounts of debt might not feel qualified to talk to their kids about finances, but they may be the most qualified.

Parents want to be good financial role models for their children, but many face financial problems of their own and don't know where to start.

More than two-thirds of parents said they are "very or extremely concerned" about setting a good financial example for their children, according to a survey released this week by investment management firm T. Rowe Price. Yet 1 in 4 parents said they're "not good with money" so they don't think they should be the ones to teach their kids about it.

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"Parents in huge amounts of debt or living paycheck to paycheck think they're least qualified to talk to their kids, when they may be most qualified," said Stacy Francis, a New York certified financial planner who is also founder of "Savvy Ladies," a nonprofit financial empowerment organization for women. "They can share what's been working and what's not been working."

More important is that they encourage good financial behavior, but that's not always easy to figure out.

"The relationship with parents, kids and money is pretty complicated," said Stuart Ritter, a certified financial planner with T. Rowe Price. "One of the things we learned from parents is they'll borrow money from their kids to tip the babysitter. Hopefully they're putting it back. And they're bribing their kids. They're using the money as a reward."

Nearly half of the 1,000 parents surveyed in the new T. Rowe Price report admit they bribe their kids with money to encourage them to do the right thing. And when parents run out of cash, almost one-third admitted they sometimes "borrow" money from their children’s piggy banks.

One great way to get the money conversation started is to give children a cash allowance, said Francis. "It's a good way for kids to start to learn responsibility — allowing them to spend a portion now, save some for a big goal, save some for college and give a portion to charity."

There can be many teachable moments, agrees Ritter. Parents just need to be more proactive to incorporate money matters into the conversation.