You may be a financial dynamo. You wisely budget your various income streams, setting aside funds in savings or retirement accounts, and obtain copies of your credit report regularly to ensure you are both building credit and your credit history is reported accurately.

But what about your children?

The prevalence of basic financial education classes in high school may be diminishing. Teens (and their younger "tween" age demographic) are marketed to more heavily than ever before. Even young children make brand associations with some of their basic needs, thereby giving preference to products that may not be of value, but are recognizable through packaging (consider McDonald's, for instance).

It is well known that many companies, retailers, restaurateurs, clothing designers and cell phone providers are competing for your children's dollar. The end result? In their national survey of teen earning and spending habits, the National Consumer League (NCL), found most teens (55%) claimed they worked for the main purpose of spending money.

And where do they learn about money and credit? Most teens surveyed reported their main source for financial information is their parents. Considering the continuous negative savings rate in the US, it may be no surprise that the children of spenders are likely to spend just the same.

However, the NCL survey also found that approximately 9 out of 10 teens do save at least some of their earnings from part-time or neighborhood odd jobs. But the money they save is most likely towards the purchase of specific goods they can't currently afford. Fewer claimed they were saving for college (22%).

In the least, teens do have some habit of saving and some savvy spending habits. By expanding these saving and spending tendencies and teaching them sound financial skills, children and teens will be prepared to make wiser decisions with their money after their early days of allowance and piggy bank-savings. Additionally, by teaching the tenets of financial planning, they may be able to either learn from or avoid your mistakes, such as bad credit development (see "Understanding Credit" for more information), or failing to create or maintain a working budget.

With that in mind, the most basic elements of consumer finance (budgeting, saving, and credit) can be modeled or taught to those as early as age five. From simulated budgets to creating a model for credit using allowance, children and teens can learn to manage their finances wisely for now and the future.

These articles can help:

• Budgeting for Teens and Children
• Model Earnings for Young Children (revise or remove)
• Financial Futures Start Early
• Credit, Credit Cards and Kids (revise)

References

National Consumer League. Teens Spend Money, Want Credit, Need Education.

National Consumer League. Teens and Finances 2002 Survey Results: Teens and Financial Education.

Money Wi$e. Talking to Teens About Money.

Business Week. Get'em Started Early; PNC's Bruce Bickel explains how to teach your kids money management and charitable giving.

Jannelle A. Williams. Passing on the Wisdom of Wealth.

Kiplinger.com. Explaining the Budget to your Kids.

Space Coast Credit Union. Raising Money-Savvy Kids.

Schwab MoneyWise. Benefits of Saving Early.