How can you learn to manage money if you never have a chance to practice? I believe kids --from preschool on up -- need opportunities to practice spending money. They need a chance to make choices and learn from their choices (and mistakes).

Summer is a great time for kids to practice spending money. For one thing, they have all this free time to think of things they want! Of course, to spend money you have to have money. And that brings us to the concept of earning money.

Every summer I have created an "extra jobs" list of things I'd like to have done around the house. Each of these jobs has a dollar value -- from a quarter when they kids were young to several hundred dollars now that I have big teenagers with real muscles and skills. I think these need to be real jobs -- not make work -- for kids to really buy into the concept that what they do has value.

To introduce older kids to concepts of compounding interest and saving money, check out the Plan Well, Retire Well: Your how-to guide website. Online calculators are a fun way to set financial goals.

For example, perhaps your child has a goal like Jamie's:

"Jamie has a part-time job and makes $80 a month. Jamie would like to go with a school group to Florida, but it costs $350. Jamie has 12 months to save the money. This is what Jamie spends money on each month: food, $20; movies, $20, CDs, $30, and school and sport supplies, $10. How can Jamie adjust her spending so that she can go on the trip?"

Use the Plan Well, Retire Well calculator "What's It Worth to Reduce My Spending?" under the section "Dollars from Dimes" to develop a plan. Is there something your teenager would like to have or do in the next year? Here is an opportunity to practice skills that will make a difference throughout their life.

A worksheet is available to help guide teenagers through the website's first two sections. The free worksheet, "Take Time to Save Now", is available for download.

How do you encourage kids to make and spend money? What has worked for your family? Lets use this forum to share ideas! Click on my name below to send in your ideas.

A few years ago, I found myself in a grocery store where bags of snack sized candy bars were on sale for just $0.99 instead of the usual $2.50 or so. It wasn't on my list, but I put a bag in my cart. Then I thought to myself, That is a really good deal! And I put three more bags in my cart.

When I got home and was unpacking the grocery sack, I pulled out those bags of candy. I stood there with my mouth hanging open. What was I thinking, buying four bags of candy! They weren't even my favorite kind of candy bar! But I knew what would happen: I would eat them all, every single one of them.

Why did this happen? It took that event to make me realize that I could resist buying chocolate - my main food weakness - if it was full-price. But chocolate on sale was irresistible to me. It didn't matter what kind it was. If it was on sale, I had to have it.

Here's the good news. Once you identify the enemy, you at least have a chance of dealing with it. I realized that chocolate on sale was my major food weakness, and probably my major shopping weakness. It may have been on sale, but I spent money that I didn't need to spend on food that I didn't need to eat.

I've really had to work at it. But today, I can read a grocery add and be totally un-moved by huge sales on chocolate chip cookies, bags of M&Ms or Reese's Peanut Butter Cups. I probably save several dollars each week by avoiding just that one weakness. I also weigh less than I used to!

Do you have a shopping weakness? There are probably clues if you look for them. What do you have too many of? What do you end up giving away or throwing out because you never used it? Perhaps you'll see yourself in some of these examples.

• If you see a great piece of clothing on sale, do you have to have it - even if it doesn't go with anything in your closet?
• Have you convinced yourself that you're just too busy or too stressed, and that you deserve the convenience of buying breakfast on your way to work every morning? Or eating lunch out every day? Or picking up takeout most evenings?
• Will you buy anything that a kid knocks on your door to sell?
• Do catalogs leap into your lap and lure you to pick up the phone to place an order?
• Are yard sales and flea markets a form of entertainment that has turned into you into a shopping monster?
• Do you regularly check the internet sites that list the best deals on everything, and then order things that you end up never using?

Shopping weaknesses can take work to overcome. But recognizing them is the first step. Let me know how you're tackling your spending weaknesses!

We have all seen the price of gas go over $4.00 a gallon and the reality is setting in that gas may even reach $5.00 a gallon over the summer. So, where do you find the extra money to help pay for rising prices such as gasoline and food. A good place as Karen discussed last week is from an emergency account, however, you don't want to drain your emergency account for everyday spending. As prices rises your monthly household budget for items such as gasoline and food needs to be adjusted, this may mean finding ways to cut out unnecessary spending. I call this having fun being a cheapskate!

I have tried a few of the tricks below to help my household cut unnecessary spending. I hope you find something you might like to try for your family.

• Try not to spend anything for one week. Try to eat what you have in the pantry and freezer, you might try riding your bike to work, or go for a picnic in your backyard.
• Cut out unnecessary trips in the car. Think about and consolidate errands or consider car-pooling to work to save on fuel.
• Take advantage of low-cost entertainment in your community. Parks, zoos, community fairs and events usually offer low-cost or no cost fun family activities.
• Wait at least 3 days before buying any item over $20. This will make you think about the purchase and if you really need to have the item.
• Pay cash for everything. This helps you to think about purchases. Using a credit card often allows you to spend without thinking.
• Calculate how your little purchases add up over time. Do you need a $4.00 cup of coffee everyday? Check out http://www.retirewell.uiuc.edu/ for more information on how little purchases can add up to big savings over time.
• Instead of buying new toys, take your kids outside and play games you played as a child such as tag, hide and seek, or hopscotch.

I have had fun with my children trying to be a cheapskate. Trying to be creative and adjust our spending has helped my family reevaluate what is truly important and realize how much we really do have and don't need!

I just took my car in for an oil change. I didn't expect an oil change to run more than $500. But when the mechanic gave my car a once-over, he found two things that really needed to be fixed. I'm glad he found them before these things caused bigger problems. But $500 in car repairs wasn't exactly in this month's budget. So it's Emergency Fund Superhero to the rescue!

I regularly talk about the need to have enough money to cover 3 to 6 months' worth of expenses where you can get your hands on it easily (in financial terms, it's liquid). But recent events have pointed out just how important those funds can be. A good friend of mine just received a layoff notice. He's married, and his wife stopped working over a year ago when they had their first child. I was so glad to find out that he actually has an emergency fund! It may not be as big as the recommended amount, but just knowing he has money to pay the bills for a few months really takes some of the stress off.

It's tornado season here in Illinois, and we all run the risk of having flooded basements, wind and hail damage, or worse. Many of those things might be covered by insurance, but would you have the money on hand to pay to have a fallen tree removed from your driveway.

Maybe you don't have an Emergency Fund Superhero yet. How do you get started building one?

If you have a checking account, you can start by building up the minimum balance that you always have in your account. When my husband and I were first married, we "hid" a few hundred dollars there. The balance we showed in our checkbook register was a few hundred dollars less than what was really in the account. Not seeing the bigger balance reduced the temptation to spend it.

When we had accumulated a bit more, we moved that emergency money to a seperate account. Over the years, it's been in different places depending on where we could get a good interest rate. Once you've got several hundred or several thousand dollars, you care about whether it's earning 1% or 4% interest! At one point, we set up a savings account with an internet bank that was offering the best interest rates at the time. We transferred money directly from our checking account to open it. We could easily transfer additional money into the savings account to add to our emergency fund, or transfer it back to our checking account if we had an emergency and needed to use it. It was all done online, without even the cost of a postage stamp.

We've also used a money market fund. These are offered by mutual fund companies. Money market funds usually pay higher interest rates than bank savings accounts. They are not insured but they are considered to be very safe. You can check interest rates and minimum opening balances at Bankrate.com. Also look at the expense ratio, which tells you how much it costs to have money in that fund.

At another time when savings bonds were offering market interest rates, we bought bonds with most of our emergency fund. Today, savings bonds aren't a very good option. They are paying a fixed interest rates of just 1.4% (for bonds sold through October 2008) . You can't cash a new savings bond until you've owned it for one year, so you don't use your entire emergency fund to buy savings bonds all at the same time. And you'll give up 3 months of interest if you hold the bond less than 5 years. I-Bonds (inflation protected bonds) are paying a much better interest rate right now (4.84%). But the other savings bond restrictions still apply: you must hold them for 1 year and you'll pay an early redemption penalty if you cash them in less than 5 years. For more information, go to Treasury Direct.

You might not think of using a CD as a place to keep your emergency fund, because CDs have maturity dates and charge you a penalty if you take the money out before then. But a strategy called laddering can make it work.

Say you have $5000 in your emergency fund. You could put $1000 in a one-year CD, another $1000 in a two-year CD, $1000 in a three-year, a four-year and a five year CD. If you have to take money out of a CD before the maturity date, you'll pay a penalty. But the penalty may be pretty small if the CD has almost reached maturity. If you have an emergency that costs less than $1000, you can break just one of the CDs, and you can choose the one that will charge you the lowest penalty. The remainder of your money keeps earning the nice CD interest rates. If you don't have an emergency, you renew each one into a five year CD when it matures. You've set up a rolling series of maturity dates, each now earning the higher rates earned by five year CDs compared to regular savings accounts or shorter CDs. You can check CD interest rates at Bankrate.com.

Your Emergency Fund may not look like much of a superhero right now, but with a little time, effort, and interest, it's powers will grow and grow.