Financially speaking, it's a tough time to be a parent. With economic turmoil reaching the boiling point and many companies freezing any extra spending, many families are more strapped than ever. So if you're feeling guilty because you can't buy your child that video game system he desperately wants, or you're asking him to choose between playing recreation basketball or taking karate lessons this winter, I have one word for you. Don't. In fact, now is the perfect time to teach your kids some valuable financial lessons.

Sheltering kids from financial realities does them no favors. Indeed, the opposite is true. A good grasp of personal finance is one of the most valuable life skills a person can have. And while previous generations may have been raised with the constant admonishment that "money doesn't grow on trees!", too many of today's parents neglect that lesson. It's time to change that--and the economic situation we're in now provides a great incentive for doing so. In many ways, a long-term financial slowdown can be a blessing in disguise. It leads families to make a budget and stick to it. It forces them to be conscious about how they handle money. That's good for kids. It shows them how the world is supposed to work.

Here are a few helpful hints:

Tell them the truth. Kids are perceptive. If you've been acting anxious and on edge, they've noticed. Rather than let them wonder why Mom & Dad are working so much lately or constantly talking about money, explain (on their level) what's going on in the family's financial world. You can explain that what's going on in the economy means some changes will have to be made at home. Helping them understand what it all means will lessen the anxiety they feel as a result of seeing their parents worrying over money.

Explain to them how much things cost. Some parents are surprised to find out that their kids don't have a very good grasp on what things cost. A great hands-on way to open their eyes is to take them on a "money tour" around the house. For example, kids might not understand that hot water costs more than cold water, or that bumping up the heat results in higher power bills. This exercise will teach them how they can conserve and thus help the family save money.

Realize that kids learn what they live. It may sound like common sense, but you--Mom & Dad--are your kids' most influential teachers. We're seeing now what irresponsible spending does to the economy as a whole. The results for you as a family will be just as significant. Adults who are extravagant with money and fail to save for the future can expect to raise children who are accomplished spenders and poor savers. Be honest with yourself about the powerful money messages you're sending your kids. If your financial habits are poor, overhaul them now. You owe it to your kids.

Reduce their exposure to ads. The primary path to reduced exposure to ads is to cut down on TV time. The American Academy of Pediatrics estimates the average American child sees 40,000 commercials each year. Invest the necessary time to teach and explain to your kids that the point of advertising is to motivate consumers to buy the product by making it sound more wonderful or necessary than it really is..

An allowance is a great teaching tool. Find great ways to help your kids earn their allowance rather than just have it handed over to them.

Start them saving and investing early. It's never too early to start saving, and the sooner you can instill the importance of saving money into your kids the better.

Introduce the right and wrong ways to use credit and debit cards. Credit cards offer temptation for overspending and carrying debt from month to month. Teach your kids the difference between a credit and debit card, explaining that debit cards are connected to your checking account and thus prevent you from overspending as you can on a credit card.

Encourage older kids to get a job. By holding down jobs such as yard work or babysitting, kids can learn about working, earning and saving money. It also provides welcome relief for parents to not continually be the source of spending money.

Besides the learning opportunities it presents, there's another positive to the current financial crisis. It forces families to be more thoughtful about how they spend their time--and this often leads to the stunning realization that money really doesn't buy happiness.

Eric Tyson, MBA, is one of the nation's best-selling personal finance book authors and has penned five national bestsellers, including Personal Finance For Dummies (Wiley). Eric is a former columnist and award-winning journalist for the San Francisco Examiner and was also a featured speaker at a White House conference on retirement planning. He holds a bachelor's degree in economics from Yale and an MBA from the Stanford Graduate School of Business.

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