What should we teach our kids about money?

March 1, 2012: 10:55 AM ET

In a still-uncertain economic world, finding the right middle ground between encouraging excess thriftiness and decadence is elusive to say the least.

By Laura Vanderkam, contributorpiggy_banks

FORTUNE -- My children haven't quite figured out money yet, which makes sense. The eldest of the three is only four years old.

The older two have little banks that they use to stash cash from relatives, and they recently took a trip to the toy aisle of Wal-Mart (WMT) with their grandmother. They saw what they could get by pooling the fives she gave them for Valentine's Day. And so, someday soon, their father and I will need to start talking with them about money. And we need to get our story straight.

I can't say I'm looking forward to these discussions. Even though I've spent the past few years writing about money, I still find this a fraught question. My first thought was that I want my kids to "know the value of a dollar" -- to appreciate money in the same way their father and I do. Who knows what gales our economy will face in the next decades? I should teach them to squirrel away each dollar so they can hunker away from the wind at the door.

But the more I pondered this, the more I realized that, not only is teaching squirrel behavior impossible, I'm not sure it's desirable to pass along all my money attitudes. In an uncertain world, I'm hoping I can teach my kids to think in terms of abundance alongside the usual money worry -- that there's never enough. I want to teach them to be smart, not wasteful or tight, and all this suggests a tough line to walk with my little ones.

When I first started looking into the topic of kids and money, I assumed that there must be lots of research on allowances, financial education, and the like. Childrearing isn't a new phenomenon. But as veteran parents have likely discovered, there are many gurus touting different theories, and many of these ideas aren't based on any research at all.

MORE: Your cash is costing you

In terms of what's been published in peer-reviewed journals, it looks like giving an allowance that's conditional on chores seems to work best, but not giving an allowance at all has a lot going for it too.

Though the theories varied, all the gurus talk of the importance of conveying your money philosophy to your kids.

This is where I hit a rough patch. What is my money philosophy?

I know where my "knowing the value of a dollar" mindset came from. I was born into a coupon-clipping household. My parents eventually did quite well, but growing up, I felt there was a reason I needed to wait for Christmas and birthdays if I wanted something. No one was sending me to Africa to volunteer so I could write a college essay about it; I wrote my college essays in the parking lot of Fazoli's Italian restaurant on my 15-minute "smoke" breaks. Standing on your feet all day in exchange for sub-$5/hour paychecks will give you a healthy respect for exactly what it can take to earn a buck. More

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