Editor’s note: Stacey Tisdale is the author of The True Cost of Happiness: The Real Story Behind Managing Your Money. A financial expert, Tisdale appears on NBC’s "Today Show," and has appeared on "The Oprah Winfrey Show" and more. Tisdale has filed business and consumer reports for all of the CNN networks. She was a business correspondent for "CBS MarketWatch," "The Early Show," "CBS Evening News" and "CBS Radio." For seven years, she produced, reported and hosted programs for Wall Street Journal Television, now CNBC. Tisdale is an adviser for John Hope Bryant’s financial literacy organization, Operation Hope. Visit her website at truecostofhappiness.com.

A recent report by the Child and Youth Well-Being Index project (pdf) at Duke University studied the impact the recession is having on children. The results are dire. All of the progress made in family economic well-being since 1975 are expected to be wiped out. This will impact everything from childhood obesity rates — as more families rely on low-cost fast food — to social development, as fewer young children participate in pre-Kindergarten activities.

As we do our best to mitigate the predictable outcomes, something almost no one predicted is also taking place: Children are developing healthier attitudes about money. If we grown-ups play our cards right, we can create one of the most financially savvy generations in history!

Pavlov Was Right!
This shift in attitudes is largely the result of different conditioning. Advertisers and the media are promoting the ideas that being frugal and saving money are "en vogue." Mom and dad are talking about money in front of the kids. This breaks generations of the "Don’t talk about money in front of the children" mentality that is partially responsible for the financial ignorance permeating the adult population.

I spoke to a group of eight-year-olds at an elementary school a few months ago. They were telling me with pride how they were helping their families cut back. They knew that the stock market was in trouble. They knew that it was more important than ever to save money and not to buy things they didn’t need.

Turn the clock back a few years, and the young people I spoke with knew more about Gucci and Prada than they did about saving and stocks. Who can blame them? Bling was King. They saw us buying McMansions from drive-thru mortgage lenders, and the media was filled with images of "living large."

How do we stay out of evolution’s path? Remember the three key ingredients to cooking up a kid with financial smarts:

1.  Example
2.  Experience
3.  Communication.

Giving Your Child a Set of Financial Values

1. Example: The way we see money handled when we grow up (or not) is one of the biggest influences on how we will handle it as adults. Figure out the three most important things you want your child to learn about money. Figure out three things you want them to avoid. Make the changes you need to in your own behavior to be the example and role model that they need.

2. Experience: Create age-appropriate experiences for your child to learn about money. 

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Ages 4-8
Start a "penny jar." Make it a big glass or plastic bottle. Your child will get a thrill out of saving until they see that the container is full. 

At approximately age seven, give your child a weekly allowance and have the child put the money into three containers: saving, sharing, spending.


Ages 9-12
Go to the grocery store with a certain amount of money. Your child can keep a running tab to see if you will have enough money to buy it all. 

Have your child open a savings account. Stop by to make deposits and withdrawals, and get a tour of the bank.

Ages 13-15
Time and money (if mom make $ 10/hr – how many hours of work did it take to buy groceries, lunch, taxi).

Put family bills on the kitchen table and review them with your teen.

Ages 16-18
Teach them how to responsibly use credit cards. Secured credit cards can be a great option. They are attached to your child’s checking or savings account and they can start to build a credit history.

Introduce financial concepts such as taxes, mortgages, insurance and investing. There are great mutual funds for young people that have small monthly minimums and educational newsletters.


3. Communication:
Don’t talk to your kids about money like it is some abstract concept. Broad generalizations like "save more, spend less" will only go so far. If you value living within your means, for example, explain why in your actions and words. Challenge them. Make them explain why they want to spend as well.

Most important, don’t underestimate your child’s ability to understand. You may not need to tell them that you borrowed $10,000 from Uncle Eddy, but explain to them that you have to set goals as a family. Those goals must be budgeted for and saved for, and there is a limited amount coming in.

Given truthful information, our children can navigate through the financial mess that they have inherited with flying colors. We may learn a thing or two as well!