This week, New York Times columnist Thomas Friedman wrote about what the country really needs instead of yet another economic stimulus package:

What the country needs most now is not more government stimulus, but more stimulation. We need to get millions of American kids, not just the geniuses, excited about innovation and entrepreneurship again. We need to make 2010 what Obama should have made 2009: the year of innovation, the year of making our pie bigger, the year of “Start-Up America.”

On that note, and in the spirit of getting the year started on the right foot, here are five ways to teach the next generation about the American Dream.

1. You’re never too young to learn. TIME magazine recently profiled Chicago’s Ariel Community Academy and its K-8 investing program. Each incoming kindergarten class is given dominion over an investment portfolio worth $20,000; by seventh grade, the young investors are allowed to pick what and when to buy and sell. Any profits at eighth grade graduation go toward a college scholarship fund that benefits the graduating class.
2. Even lemonade stands are teaching tools. Watch our video for just a few of the lessons this classic summertime activity provides young kids.
3. Encourage teens to start their own companies. The Network for Teaching Entrepreneurship’s flagship program is a contest at middle and high schools nationwide (mostly in low-income communities) that helps 24,000 participating students start their own businesses.
4. Avoid the “Freshmen Financial Fifteen.” College students are particularly at risk for not budgeting properly, signing up for expensive cell-phone plans, and abusing their credit cards. If they are aware of the responsible use of each, they are primed for a financially secure adulthood.
5. Finally, take the Econ4U Entrepreneurship Quiz. Even adults may be surprised at what they don’t know about starting a business.

College costs are in the news because of the College Board’s “Trends in College Pricing 2009” report, which  I would encourage you to read  for yourself. The general thrust captured by these newspapers is that published tuition and fees are up 6.5% for public universities and 4.4% for private ones from the previous school year.

How can this be? Have the colleges and universities not heard that our economy has been in a recession for at least the last year?

Indeed, our institutes of higher learning are acutely aware of the recession. In fact, the recession helps explain the increase in the cost of education.

Public universities receive state appropriations as part of their funding; those appropriations are taken from state tax dollars. The size of that funding tends to increase in a good economy, and decrease in a bad one. Even in lean years, though, universities can’t cut back spending too much, or else they risk harming those characteristics (research, faculty, etc) that contribute to their reputation. Thus, when student enrollment rises and state appropriations fall, public universities are forced to raise tuition and cut costs where possible.

Both public and private universities also depend on the generosity of their private donors, who fund their endowment. This money is especially important to more expensive private universities, who use endowments to fund expansion and keep college accessible for those students they choose to accept. Many endowments took huge hits during the financial crisis, so even very wealthy schools have cut back on spending. Harvard alone lost more than $10 billion, a hefty sum for any university.

Fortunately, it’s not all bad news. In the same way working professionals are concerned with their net pay –the amount of cash they’re taking home after taxes – potential students should take note of the net cost of college. Lost in the headlines about increasing tuition costs was this nugget: the price students pay for college–after financial aid is factored in–has fallen in the last five years, by about $1,100 at private universities and $400 at public ones. So while the sticker price on that great liberal arts college might be an unpalatable $26,300, the College Board estimates that financial aid and grants will reduce your net costs to a more reasonable $11,900.

Still – tuition plus the cost of living adds up to a hefty bill upon graduation. If you’re one of many Americans who paid for part or all of their education, then you’ve likely covered part of that bill with student loans. These loans are often referred to as “good” debt; you’re using them to finance an education, and interest rates and repayment terms (especially on federal loans) tend to be favorable.

But with median debt upon graduation nearing $20,000, this does mean you should approach college cautiously. Use the Bureau of Labor Statistic’s college outlook report to research the salary in the career you would like to pursue. Salary certainly doesn’t determine your job satisfaction, but it does give you an indication of your ability to pay back student loan debt.

The benefits of a college degree are undeniable – in general, college graduates have lower rates of unemployment, and earn more money over their career. Still, a college education is an investment like any other. Before making any expensive and long-term commitment, make sure you know what you’re going to do with it.

Jeremy Vohwinkle at Generation X Finance has compiled a list of 20 free online finance courses—a majority of which are offered by colleges around the country. Highlights from the list include 23 Money 101 lessons from CNNMoney.com and an online income tax course.

If you have some free time, these courses could prove to be valuable. Even if you think you have your finances in control, it’s worth a look. You may even learn a thing or two.

Obopay offers a service that links your child to your bank account via a prepaid debit card. Essentially an allowance on plastic, the card allows users to withdraw money at ATMs, send money over the phone, or use it as a charge card (both in stores and online). For a $1.95 monthly fee, parents can control access, monitor spending, reload the cards remotely, and see how your children are budgeting their money.

Similarly, MasterCard’s Facecard works like a bank account on a card. Users can send money to other Facecard users — say, to reimburse a friend for buying your movie ticket — and receive as well (perhaps for mowing a neighbor’s lawn). It can be used for purchases wherever MasterCard is accepted. The fees are higher here: The card itself costs $5, and carries a $3 monthly usage fee for balances under $100. ATM withdrawals are an additional $1.50 a pop.

If your child is a gamer but you are (understandably) reluctant to hand over your credit card, BillMyParents.com is a way for you to exercise oversight as they pay to play. When a child enters his or her account number during checkout, parents receive an email to accept or deny the charge. It also works at affiliate shops on Amazon.com. The drawback: It might encourage kids to overspend, so make sure they discuss purchases with you first.

1.    Not budgeting
This is undoubtedly the biggest mistake we college students can make.  It is important to set realistic goals to get a handle on your finances so that you know how much you can afford to spend on fun stuff.  Look at past fixed and variable expenses, know the payments you have to make on a regular basis, make a plan, and stick to it!  Check out our budgeting tips.

2.    Only making minimum credit card payments
Freshman year of college is an easy time to get plastic happy and spend more than you can afford. If you’ve gotten into debt, you may think that making the minimum payments on your credit cards is paying down your debt.  In reality, only paying the monthly minimum means you’ll end up owing much more in the long run.  Most cards have a minimum payment of 4 percent of your balance.  If your card has an 18 percent interest rate, it will take more than 10 years to pay off a balance of $3,000, paying more than $1,700 in interest.  If you paid $150 per month instead, you could save $1,100 and be debt-free in two years.  Try to put as much money as you can toward paying down credit card debt – you’ll be thankful later.

3.    Overusing your student ID
Credit cards aren’t the only way for students to overspend and end up in debt.  Most students have a university ID that can carry meal plans, laundry money, bookstore credit, vending machine cash, etc.  When you swipe your ID for a new sweatshirt at the bookstore, it may not feel like spending money. But those charges don’t just disappear – you will wind up getting charged for expenses at the end of the semester.  Having meal dollars on your ID is certainly convenient, but keep track of how much of your $500 semester allotment you’ve spent – you don’t want your late night snack runs to end in October because you’ve already spent your cash!  Know how much money you have on your student ID and don’t use it recklessly.

4.    Buying a new cell phone
It seems like every month an awesome new must-have cell phone is on the market.  It’s easy to fall prey to ads for “free phones” or phones that only cost a dollar.  Don’t be fooled, cell phone companies offer deals to lock customers into contracts for years.  The real cost of that new phone is hidden in your monthly bill.  Losing or damaging your free phone can cost you hundreds of dollars.  Before you sign up for a phone contract, figure out how much you’ll end up paying.  A $70/month plan with a two year contract adds up to $1,680.  Not exactly a free phone – a cheaper plan can save you a lot of money for a rainy day.

5.    Not having insurance
Buying any kind of insurance can be expensive, so it is important to assess risk before purchasing coverage.  But in college you never know what might happen.  If your belongings aren’t covered under your parents’ homeowners insurance what will you do if someone sets off your dorm sprinkler or there is a fire?  More importantly, do you have health insurance?  Most universities offer low cost health insurance to students, so make sure you’re covered!  (Also, using university health centers to get your prescriptions can be a great way to save – most have special pricing for students.) For more, look at our Money Matters piece on Insurance: Risk vs. Reward.

6.    Opening new credit cards
It’s easy to think that signing up for a credit card to get the free John Belushi “College” t-shirt is a good idea.  But signing up for all those credit cards to get “free gifts” is an easy way to damage your credit score without even realizing it.  Even if you never buy anything with the credit card, applying to many cards at once can damage your credit.  If you’ve signed up for one recently make sure you’ve called to cancel.  Are you looking for a credit card on campus?  Consider cards designed for students or an affinity card with your University.

7.    ATM fees
When you “approve” a $3 fee at an ATM, you might assume that the fee is all you’re being charged.  The truth is that you are probably getting hit with two fees, one from your own bank, and one from the bank that owns the ATM. With a little advance planning, you can get the cash you need from your own bank’s ATMs, without paying any fees.  If you go to school away from your home bank, you’ll save a lot of money by opening a free local checking account.

8.    Not using your meal plan
Mom’s not cooking dinner for you anymore, and it’s easy to get sick of college cafeteria food. But that doesn’t mean that you should ignore the dining hall altogether, especially if your meal plan is already paid for.  Take advantage of endless breakfast cereal in the morning (and late at night) and bars of sandwich fixings during the day.  Saving money on meals and snacks will allow you to budget more for eating out on the weekends. Remember to eat healthy, though, unless you want to experience the other, better known, “Freshman 15.”

9.    Overdrawing your bank account
Overdrawing your bank account is one of the most common and most expensive financial mistakes.  Each fee can cost $20 to $60, and they add up fast.  Some banks will even rearrange your purchases to charge you more times in a single day!  The best way to avoid overdraft fees is to make sure you have some savings in the bank.  Even though your bank statement shows a positive balance, you may still have outstanding checks.

10.    Not taking advantage of campus amenities
Are you spending money on a monthly gym membership?  Paying to use a pool or tennis court?  Going to study at the coffee shop?  Paying for Netflix?  These are just a few things you may have access to on campus that could save you a bundle in the long run.  If you have a fitness center, pool, and tennis courts on campus, your student activity fee has probably already covered the cost of using them.  Try studying in the library or study rooms instead of wasting $5 on the cup of coffee to sit in a cafe. Check with your dorm front desk or your library – most campuses have a wealth of must-see DVDs you can rent for free!  Take advantage of what is around you, so that you don’t waste money going off campus for resources you have at your fingertips.

11.    Not saving
You may think that just because you’re in college you don’t need to start saving, but we all know that starting to save early is critical to financial security down the road.  Even if you’re saving for the short term – spring break, a new bike, a bigger television – savings are important.  If you have a job, look at your net income and designate an amount to save even before you start spending your paycheck.  Setting aside money early (and earning interest over time) is an important factor in building wealth.

12.    Ignoring your credit report
Of course you’ve seen the freecreditreport.com commercials, but you’ve probably wondered how they apply to you.  Decisions you make in college can affect your credit report down the road.  The credit card debt you accrue now could prevent you from buying a house in the future.  Maintaining good credit by paying bills on time and managing your money will pay dividends later.  Learn more with our Money Matters pieces on credit scores and credit reports.  And thanks to federal law, you are allowed one free credit report a year from each of the three credit bureaus – get your real free credit report at AnnualCreditReport.com.

13.    Keeping a car on campus
Going from your parents’ house to college, you may think that you absolutely have to have your car.  This likely isn’t the case – many campuses have all sorts of public transportation for students including airport rides, safe rides, and rides to the grocery store.  The city you live in may have a transit system of its own.  The costs of keeping a car on campus can seriously crunch your budget, what with the high cost of parking, gas, insurance, and the inevitable campus parking tickets you’ll receive. There’s a good chance you’ll come out ahead by leaving your car at home.  If you can’t stand the thought of going car-less, look into car-sharing systems like Zipcar, which are often cheaper than owning your a vehicle outright.

14.    Spending all your summer earnings during the summer
This goes hand in hand with saving, saving, saving.  Not every student works during the school year, which means that if you work a summer job it is important to save some of your earnings to expand your budget for the school year.  If you don’t set money aside or spend it all at the end of the summer, you’ll be leaving your pockets empty for when you want to buy the latest edition of Rock Band for your dorm room.  Save now, or you won’t be able to spend later.

15.    Not being thrifty
Avoiding financial mistakes in college takes a little bit of effort and being smart with your money.  Being thrifty in college is easy, so look for opportunities to save.  If you’ve been buying your books new at the bookstore, chances are you can get used copies much cheaper on eBay, Amazon, or other textbook websites.  Instead of going out for pizza or ordering lunch see what events are happening on campus.  There is almost always a free meal somewhere (and they usually come with a fun activity or speaker)!  Check your student newspaper for free and discounted activities, and don’t forget to ask for student discount.  You’ll be amazed how much you can save!

As the Oregonian reports:

Frugality is the new cool in this back-to-school shopping season, expected to be one of the slowest in a decade. With the recession pinching pennies, parents are bingeing with coupons, buy-one-get-one-free deals and last-minute Internet sales. Retailers are advertising layaway plans and slashing prices, hoping to boost dismal earnings reports.

And while Oregon shopping centers see an uptick in sales from Washington visitors trying to save a few bucks on sales tax, the biggest sign of the recession’s impact might be gleaned from the latest back-to-school fashion trend: No splashy logos, no brand names on anything, from necklaces to notebooks.

Back-to-school shopping is typically a big time for retailers. The National Retail Federation says the average family is expected to spend $618 this year on college students, up 3 percent from 2008. But part of the reason behind the increase is that expensive items — like notebook computers — have come way down in price.

If you’re in the market for some back-to-school gear, keep in mind these few key pointers for students:

• Don’t put anything on credit that you can’t afford to pay off at the end of the month. 
• If your parents have cosigned on a credit card for you, talk to them before you do something that will get you yelled at. 
• And definitely don’t spend excess student loan money on clothes — it’s still the beginning of the school year, so keep some on hand in case you need it down the road (because you probably will).

The article makes a strong point: While it is a great gift to allow your child to graduate college debt-free, in the real world, not having a credit history can also be a significant drawback.

Some parents take out college loans with the intent of helping their children build their credit history when the money is paid back. Of course, this is only effective if the loans are managed properly and paid back on time each month. Some of the tips offered in the piece can help this kind of situation, replicating real-life instances that can be “practiced” so teens are not experiencing them for the first time when they get their own credit cards:

Do a Debit-Card Test Drive
When his son started his senior year in high school last year, Mr. Arnold helped him open a checking account and gave him a debit card. If his son proves to be a responsible debit-card user, Mr. Arnold says, he may be willing to co-sign a credit card during his son’s sophomore year in college.

Make Your Child an Authorized User
If putting yourself on the hook for your child’s spending makes you uncomfortable, you can take a safer approach by making your child an authorized user of one or more of your credit cards. This way, the payment history of the card will appear on the child’s credit file and help him or her build a good credit history–assuming, of course, that the parent handles the card responsibly.

For me, this kind of system would have been helpful when I got my first debit card. On my 18th birthday, my Dad and I went to the bank to set up my debit account. But turning 18 didn’t necessarily mean I had all the answers on how to be an adult and manage my own money. A system like this could have helped me transition into things like avoiding overdraft charges. Luckily, I was able to use my time in college to become a responsible money manager, and I understand that if I want to spend money, I have to make it.

It’s a great feeling to control your own finances (and a weight off your parents) but readers beware, it takes work and responsibility to achieve financial independence. So start as early as you can!

Always organized and never one to miss a sale, I’ll admit that many times during college I flirted with the minimum balance in my checking account. Even though I worked during the summers, that money dwindled quickly over the school year.

This week CEEL released information on a survey of 500 college students that shows an overwhelming number of America’s college students are already credit dependent, but do not understand the basics of borrowing and interest rates.

I came upon an article that details some of the most common mistakes that college students make when it comes to managing money.

Tip #3 “Ignoring Your Checkbook” reminds me of a time when I asked my classmate to hold off on cashing my check for a used book until I made sure I had plenty of money in my checking account (much to the concern of my father). The point is that even though I did have enough money to pay her for the book, I wanted to be diligent about my minimum daily balance and be sure that there was enough padding in my checking account to avoid any kind of overdraft charges in the event of an emergency.

Whenever possible, it’s better to be cautious and pay close attention to your money. With warnings against financial flubs that many students might not easily think of, a  lot of the other tips are very helpful—#2 “Spending Leftover College Loan Money,” #4 “Blowing Through Meal Plan Points” (another concern of Dad’s), and #5 “Lending Money to New Friends“.

Some of the tips are obvious: Don’t buy a new car or brand-name groceries, turn off your lights when you leave the room, cancel your cable to save money, etc. And sometimes it seems like a requirement among personal-finance columnists to mention the $4 latte.

Just about everybody already knows these things. But what are some of the more insidious money pits? We offer these from our archives:

• Credit cards that offer rewards frequently mean an annual fee and higher interest rates than cards that do not — and if you carry a balance, you’re probably spending more than you’re receiving back in perks.
• If you wait until your 30s to open that retirement account, you’re losing out on potentially hundreds of thousands of dollars in compounded interest. That’s a lot of lattes you could be drinking in retirement.
• Having a baby is expensive. Having 14 babies is really expensive. Be sure you’re financially stable before you start a family.
• Living in a state with a huge budget shortfall inevitably means you’ll pay higher taxes than if you choose to live elsewhere. (Here’s looking at you, California and New York.)
• Taking on student loans that exceed 15 percent of your gross earnings is a recipe for long-term debt. Something to consider before you pursue that MFA.

In Missouri, the Boys and Girls Club of West Central Missouri puts financial lessons into practice with its “club bucks” program.

The members get “club bucks” for attending different programs throughout the week, then receive an itemized paycheck. To cash the checks, they must fill out a deposit slip at the club’s bank, and may then spend the bucks at the club store, open once a week, or buy time on a computer or play the Nintendo Wii.

The program coordinator noted that the teens in the program are at “a very impressionable age.” Some teens participating in the program said that it was difficult to save the “club bucks” and that the program is teaching them what they will have to do when they are older.

As we have reminded readers time and time again, it’s never too late to talk to kids about learning how to manage money. Kudos to the educational institutions and community groups across the U.S. who are giving kids a head start for their future finances!