DEAR HARRY: Today is a turning point in teaching our 3-year-old about money. We had dinner with friends who have a son who's a bit older than ours. They had to promise to pay him $3 for him to eat his spinach! Can you help us avoid this nonsense of bribing kids? How can we start with good habits? We have a modest income and we are able to live beneath our means.

WHAT HARRY SAYS: For many, following an example is the best teacher. If your child sees that you are handling money responsibly, he will learn quickly to follow. The converse is also true, and to a greater degree.

Teach your child that delayed gratification is often the best route. Pay the child modest amounts for modest chores around the house. Have him divide it into categories for imminent spending, saving and charity. The importance of charity can't be overemphasized. Help with the decisions.

Do not bribe the child. No more "stop whining and I'll give you a dollar." Tie saving into delayed gratification. Use every opportunity to teach the time-value of money and the idea of interest. Make your child aware that his parents follow what they preach. Allowances are important at about 10. Help your child allocate that money. Discuss any aspect of money when the issue is raised by the child, not "tomorrow."