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TRAIN YOUR TEENAGER TO MANAGE MONEY

Attention parents: Feeling a bit overwhelmed by that awesome spending machine -- also known as a teenager -- living in your home? You're not alone.

Teens spend an average of $100 a week; that amounted to a staggering $153 billion last year alone. Yikes.

Yet while teens have mastered the American art of conspicuous consumption, they sure don't make the grade when it comes to the "responsible" side of money: knowing how to budget, save, and borrow.

And such ignorance can lead to real trouble later on. A survey of recent college graduates found that 35 percent had debt payments unrelated to their education, of more than $1,000 a month.

"Just as we teach kids to drive responsibly, we've got to teach them to use credit and manage their money responsibly," said Kathy McNally, vice president for national financial literacy for the National Foundation for Credit Counseling. Here's a primer for teaching kids about managing money:

Make bill paying a family affair. Showing your kids what you actually pay for the mortgage, utilities and other essentials can be an opportunity for other life lessons as well. McNally offers this example: "When I ask you to turn out the lights in your room when you leave, here's why: This electricity bill is really high. Let's all work to lower it."

Give a clearly defined allowance. Whatever the amount, make clear what you expect them to pay for (movies, after-school snacks) and what you will cover (cost of school lunches, clothes).

Encourage tracking. An allowance is really a mini-income. When teens track exactly how they spend their money, they become more conscious of what things cost -- and can then make decisions like choosing to forgo $20 a week in fast-food snacks to save up for $100 in-line skates. (And try this one on your money-machine: John Rockefeller required his children to account for every penny of their weekly allowances in a small account book.)

Open a checking account for your teen. Whether it's funded with an allowance or your teen's paycheck, shop for an account with the smallest balance requirement and the lowest service charge. Balance the checkbook with your teen for the first few months, and make sure your child understands about fees for bounced checks.

Consider a debit card. Once your teen masters managing a checking account, you're ready to venture into the land of a debit card. Not only is it a good tracking tool (since whatever is spent shows up in the monthly bank statement), it's also impossible to spend more than is in your account.

Offer a credit card -- with strings. You can apply for an extra credit card under your own account at a retail store or bank. But before allowing your child to use it, explain that paying by credit card is really getting a miniloan: It's not free money unless the balance is paid in full before the grace period expires.

"Ultimately, learning comes from paying for what we've acquired," McNally said.

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