Around age 5, children begin to understand how money works. It's right about then that you can start teaching them the value of saving for the future. They'll start to catch on when one week's allowance no longer buys a coveted toy. In a flash, they'll start stowing away weeks' worth of allowances to accumulate the needed funds.

The power of saving is a simple but crucial lesson. Judging from the amount of credit-card debt nationwide, it's clearly not one many adults have mastered. If children grow up understanding money as a finite resource, they'll know that the way to get the things that they want is to manage it properly.

Not opening your wallet every time your grandchildren say "I want that!" is one of the best gifts you can give them and will develop their savers' mind-set. Let them discover, just as you did growing up — before the days of E-Z credit — that saving up for an item they're pining for is not only fiscally responsible but psychologically gratifying. When your grandchildren earn the right to own what they want to buy, they will appreciate it all the more.

Want to involve your grandchildren in paying for college? Get them saving. Students who are aware of the high cost of college and who assume some responsibility for paying for it will assign more value to their education and get more out of it. Even if the dollar amount they are able to contribute is minuscule compared with the total bill, the fact that they contributed something will provide an enormous psychological benefit.

Here are some ways you can encourage grandchildren of any age to get involved in paying for college:

Help them start a pint-size college fund. The key here is that this is accessible to your grandchild. She's the one who contributes to if she wants to see it grow. It's separate from the accounts to which you or her parents may contribute. For a small child it could be a piggy bank or a jar. Try a passbook savings account or even a mutual-fund account for an older grandchild.

Show them the money. Kids love to do chores for money — sweep the floor, rake leaves, carry groceries, feeding the pets when you are away — and by doing so they learn the concept of working for money. Pay them in small bills and suggest that they put some of that money into the college fund. If you live far away from your grandchildren, do this during visits. Or set up a system with their parents whereby you will pay for chores your grandchild does around the house over and above his regular responsibilities.

Talk about scholarships. Explain that students who excel in high school may be given scholarships that pay for part or all of their college education. Rather than working at odd jobs during high school, some students may prefer to focus on their studies and use their extra time to search for free money.

Consider the cost side. Students who have a vested interest in paying for college may be more likely to consider the total cost of college when deciding where to go. Cost-cutting strategies include attending an in-state public university instead of a private school, going to community college for two years before transferring to a four-year degree-granting institution, and taking AP classes in high school in order to complete college faster.

It's unfortunate that financial-aid formulas discourage students from saving in their own name (assets belonging to the child count more toward the expected family contribution than assets belonging to parents or grandparents).

Really, any amount a child can save is likely to be a drop in the bucket compared with the total cost of college. Besides, they can always spend the money on computers and supplies before the time comes to report it on the financial-aid application. The main benefit of getting children involved in paying for college is that it teaches lifelong lessons in money management and boosts the perceived value of their education.