Show Kids The Money?

One of my bad habits is contemplating my failures as a parent. The evidence of this surrounds me. My teenagers watch too much television and spend too much time on videogames (even though we remove the controllers during the week). Their rooms do not reflect my constant commands that they clean up. Even my wife's stern common sense cannot compensate for all my parental shortcomings. But to my list of defeats now can be added another: money management.

I have failed to instruct my children properly. I know this because I have just finished David Owen's delightful book, "The First National Bank of Dad: The Best Way to Teach Kids About Money." Children should usually receive generous allowances and have more control over their money, says Owen. "If the money they spend isn't truly theirs," he writes, "they have no compelling reason to pay attention to how they spend it." Sounds sensible. But allowances in our house are modest; our children might say "stingy."

Owen offers some imaginative ideas for inspiring good financial behavior: Dad should create a fictitious bank with high interest rates (say, 3 percent a month) to teach children up to 12 the virtues of saving; Dad should create a fictitious stock market with shares valued at one hundredth of actual prices to teach teenagers the pleasures and perils of investing. I have done none of this.

As a journalist, I'm intrigued by the book's mere existence. It's more evidence of America's astounding affluence. The notion of lecturing children about mutual funds would have struck our ancestors as absurd. So, too, the possibility that children would have discretionary income. But they do. In 2002 all 12- to 19-year-olds spent $172 billion, estimates Teenage Research Unlimited. That was money under their control, not what parents spent on their behalf. It amounted to an average of $92 a week for 16- to 17-year-olds. An estimated 47 percent of these teens have cell phones.

Children are said to grow up faster now than ever before. In some ways, the opposite is true. A century ago many children--certainly those over 11 or 12--had jobs. On farms, many "worked as much as adults," notes sociologist Donald Hernandez of the State University of New York at Albany. As for factory work, the first child-labor law dates to 1837 in Massachusetts, reports economist Carolyn Moehling of Yale. By 1890, 17 states imposed age limits on hiring; three were as low as 10 and none higher than 14.

What made children work was not parental cruelty but economic necessity. Families needed labor and money. As economic creatures, children and teenagers have moved from being mainly workers to being mainly consumers. Of course, many teenagers have jobs today (about 40 percent of 16- to 19-year-olds are in the labor force). But their earnings go mainly for pocket money, not family income. A century ago teenagers started a life of full-time jobs; now most teens have part-time or temporary jobs.

It wasn't until most teenagers were in high school and began "to look to one another and not to adults for advice, information, and approval" that they emerged as a distinct class, notes Grace Palladino, author of "Teenagers: An American History." This process culminated only in the 1950s. (In 1920, 16 percent of 17-year-olds were high-school graduates; by 1960 that was 63 percent.) But once it happened, aggressive advertisers and merchants responded.

Every young American now receives a free tutorial in envy and extravagance. This starts with a visit to Toys "R" Us and the endless aisles of dolls, videogames and sports equipment. After that it intensifies. On MTV, the program "Cribs"--my children actually like this (sob!)--features the homes of rich young rap stars, athletes and actors. Mercedeses, Hummers and Escalades crowd the garages; swimming pools and sculptures fill the backyards.

What fascinates me as a journalist baffles me as a parent. American culture creates a tension between achieving material success and not being controlled by it. How do we teach our children to use money wisely? I agree with Owen that we ought to provide guidance. But aside from parents' examples--our attitudes toward money, spending and saving--I am at a loss. I lack Owen's optimism that good financial judgment can by imbued by artificial games. Sensible saving and investing habits strike me as adult skills that must be mastered as adults. Even if I'm wrong, the stock market's collapse suggests that today's parents aren't the best teachers.

The trouble is that today's middle-class children are educated into a doctrine of effortless wealth. We parents may make it worse. The very comfort that we try to create for our children may give them the misleading impression that achieving the same for themselves will be more automatic than it is. As adults, my children won't be able to use money wisely unless they first earn it. I wish I had a formula for ensuring they'll get well-paid and satisfying jobs, but aside from the usual advice (work hard, follow your dreams, be lucky), I have none. This may be unavoidable, but I count it as another failure.