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Parents urged to practice 'financial honesty'

Popular wisdom says survivors of the Great Depression embodied the principles of living within their means and saving for a rainy day.

Yet somehow, later generations grew up to borrow as if there were no tomorrow.

Suze Orman thinks that disconnect reflects negative messages about frugality that today's indebted parents heard as children. "Those values were despised, not respected, that's why it didn't translate," she said. The lesson remembered was one of the pain associated with having to sacrifice.

The television host and author believes it's possible to teach these tenets to children in a more positive way, one that will help them avoid the burdens of debt and uncertainty. "It's all how you present the information that they need to know."

In her new book, "The Money Class," Orman emphasizes what she calls "financial honesty." She maintains that in their zeal to give their kids everything from abundant toys to the finest college education, modern parents have been dishonest about fiscal realities.

"It's been a message that it doesn't matter if you don't have money," she says, you're going to be able to spend whatever you like anyway.

The tireless financial guru says it's time to start a new chapter. She wants parents to teach their kids that buying something that you cannot afford is being dishonest. That saving can be fun. That it's good to talk about money -- what money can do, what it can't, and how much is really available to the family.

"I'd like to see everybody feel as free to talk about money as they do sex," she says.

Among the lessons she'd like kids to learn:

* You're not entitled to an allowance.

Parents have long debated whether kids should get an allowance or be required to earn money by doing chores around the house. Orman is firmly in the second camp.

* A household requires cash to function.

"There is nothing wrong with involving your kids in the bill-paying process," Orman says. Teaching about the cost of utilities and how a mortgage works makes it clear how much money it takes to run a household, and helps prepare kids for being on their own.

* You don't need to spend every dollar you've saved.

Although teaching kids to set aside money to buy what they want is important, Orman says learning to save without intending to spend the entire kitty is equally vital. Otherwise, they'll never establish a habit of saving for the long term.

"Kids have an amazing ability to learn," she says. Take pride in being honest, and that will be what they learn to value.

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