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Spoiling children doesn't make them money smart; Indulging kids is fun, but is it smart?

My nephew, Josh, celebrated his 14th birthday last week.

This kid is my bud. Not only is he my nephew, he's my godson.

I waited in the hallway outside the delivery room and got to hear his first cries as he was being born.

For most of his life, he lived just five blocks from me, so we spent a lot of time together. And since I was single and living at home, we also spent a lot of money together.

You want an rare, original King Ghidorah figure shipped overseas from a collector in Japan? You got it! There's a Godzilla convention in Chicago? Hop in and let's hit the road!

My brothers and sisters doted on him, too. And he was the first local grandkid for my dad to spoil. So it's no big surprise that he became a little, shall we say, indulged.

I had always loved picking out his birthday presents, finding obscure toys or comics he would love at little out of the way shops. But this year, being a teenager, he wanted money.

I didn't want to just throw a bill in a card and hand it over. I wanted to make it fun. So I decided I would put it in a box and wrap it up, so he would have the fun of tearing open the paper.

Once I started thinking, I got the idea to convert the money to singles, and bundle it up with a banker's strap. How cool would it be to get a big stack of cold hard cash for your birthday?

But then I started feeling a little irresponsible, and pretty guilty for all the years I had spent spoiling him. It had been fun while it lasted, but now that he's getting older, I've started to realize what I've been setting him up for.

Spoiling a kid certainly does him no favors.

Still, I wrapped up the bundle of cash. But with it I added three old mugs out of my cupboard and a book called "Three Cups" by Tony Townsley and Mark St. Germain (

The story is written to be understood by much younger children, but it gives a great introductory lesson on managing money for kids of any age. It illustrates the importance and adventure of setting money aside and of giving money to help others.

It's the story of a boy who gets three cups for his birthday, meant to help him divide his money. One cup is for spending, one cup is for saving and one cup is for giving.

So Josh got his three cups, his how-to guide and his stack of birthday cash. Then we went through and figured out how much would go into each cup.

How long will the money stay there? I don't know. It will take more than a book and a couple of mugs to undo a lifetime of indulgence.

But it's a good place to start.

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