Why is it so hard to talk to kids about money?

Pearl also believes in letting children make mistakes when they spend. Rather than saying, "I told you so," she says, ask them, "How would you do it differently today?"

Ms. Staton also finds value in giving children early experience in paying penalties. "If they don't get a video rental back on time, they pay the fine. They feel that's punitive, but in the long term, it's a small penalty. When they're older and they miss a car payment or a house payment, they get a penalty, and it affects their credit rating."

Ellen Weiss of Lake Zurich, Ill., started early to teach her son and daughter about money. As soon as they were old enough to write their name with a fat pencil, she took them to get a passbook savings account. She also makes a practice of handing over their allowances in the bank lobby, where she asks, "How much are you depositing?"

The training has paid off. Max, now 11, and Stephanie, 14, keep close track of their savings-account balances. "They probably can tell you to within a dollar what's in there," says Ms. Weiss. This year Stephanie withdrew $800 to help pay for an eighth-grade class trip to Germany.

As one way of emphasizing that even small amounts of money have value, Weiss keeps a change jar in the kitchen. If she finds money around the house - a pile of coins on top of the dryer, for instance - she puts it in the jar. That becomes "souvenir money" for a trip. Over seven months, the jar might add up to $18 or so. "One time it really surprised them by going over $30," she says.

Many students face temptation to spend at every turn. College freshmen receive an average of eight credit-card solicitations the first week of school, according to Godfrey. Without proper instruction, she warns, "It's like handing the keys to a car to a child and saying, 'Go figure it out as you're driving.' None of us would do that. Why would we hand them a financial vehicle and expect them to figure it out? We need to be involved in that process."

To give parents added support, financial institutions are stepping in to help with education. PNC Bank in Pittsburgh is offering two half-hour courses for freshmen during orientation week at area universities this month. Students learn the basics of budgeting, reconciling a checking account, and using credit wisely. They also discuss the consequences of not paying bills on time.

"This electronic generation knows how to get cash easily out of ATMs, but not how to manage their finances and control their cash," says Lila Batz-Krause, executive vice president of PNC Bank. Some students even lend their ATM cards and PIN numbers to friends.

At KeyBank in Cleveland, high school students 16 and over can open a free checking account with a parent. At 18, the student can take the parent's name off. The account limits the possibility of overdrafts. If students do overdraw, penalties are less severe than those on standard accounts.

The bank also encourages parents to give students a prepaid debit card. "If you want them to have only $100, that's all you load in," says Dan Ryder, a bank vice president.

Other financial experts underscore the importance of such guidance. Money is the No. 1 cause of divorce, Pearl notes. By teaching children to be responsible and values-based in using money, she says, parents accomplish a dual purpose: They help offspring to be financially successful, and they help ensure that money won't be a big problem in their relationships.

Calling financial literacy "a solvable problem," Godfrey tells parents, "You just have to commit yourselves. You have to start teaching the concept of finite. 'No' is a very important word for parents to learn."

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