YOUR KIDS NEED TO LEARN FAST

WHILE the average 12-year-old will know about the birds and the bees, they are less likely to know the financial facts of life.

Personal debt is set to become an epidemic for future generations as credit becomes easier to obtain and temptation harder to resist.

The best way to avoid getting into money trouble in later life is education.

The bad news for mum and dad is that it's down to you. The good news is that talking to your kids about money should be less embarrassing that the "where babies come from" chat.

The National Curriculum offers cash coaching through Personal Social and Health Education (PSHE) and Citizenship classes. However, your child could be as old as 14 before they get this guidance and by then they may already have developed bad habits. Here we break down 10 things every child should be told about money before they are 12.

1. Know the family finances: "Financial habits are ingrained at a very early age," says Ann-Marie Blake, of NatWest, which runs educational programme Face2face with Finance.

Involve your child in family budgeting, planning and saving, so as to help them realise why they can't always have the latest trainers and develop a sense of what decisions need to be made.

2. "Money doesn't grow on trees and you have to work to earn it": so says Peter Eldrid, deputy chief executive of charity Parentline Plus. It's obvious, but the sooner your child accepts that work is the main source of money, the better. Try rewarding your child with pocket money in exchange for completing household chores.

3. How to budget: help your child to write a personal budget, including bus, lunch and pocket money, and keeping records of what they spend.

Encourage them to start the saving habit early.

4. Not budgeting can have unpleasant consequences: resist the temptation to bail your child out if they don't save enough for what they want. When you can't afford something because you didn't save enough, tell your child.

5. How to use a cash machine: some children's bank accounts provide holein-the-wall access to their cash, such as Yorkshire Bank's Cybersave account (www.yorkshirebank.co.uk). Teach them how to do this safely.

6. Asking questions about money makes them clever, not stupid: encourage them to be questioning, whether it's about being asked to lend cash to friends or why something costs so much.

7. The difference between debit, credit and prepayment: make your child clear on the differences early.

8. Borrowed money is not free money: save your child from the debt trap - if you lend them money, write out a Bank of Dad or Mum credit note and note the debt until it is paid off.

9. You have a choice on what to spend your money: tell them that shopping around can save money on CDs and clothes, making them more likely to get the best deals later in life.

10. "There is a difference between wanting and needing": this is vital to your child's financial capability, says Eldrid. It's easy for children to confuse needs and wants, especially when under pressure from their peers to keep up with the latest trends. Involving To stand your children in good stead for the future, it pays to get them adopting sound financial habits.

Here Helen Monks gives her top 10 tips

Where the money goes them in family budget tradeoffs ought to help them to distinguish the two.

_You can call Parentline Plus for free confidential advice on all aspects of parenting on 0808 800 2222, or go to www.parentlineplus.org.uk.

first home Find out more www.thisismoney.co.uk Find out about savings for children by looking under Fact Files at Name: Scott Wells.

Age: 20.

Lives: South Woodham Ferrers.

Occupation: client manager.

Status: single.

Income: pounds 15,000-pounds 25,000.

Rent: pounds 100 a month.

Spends: pounds 250-pounds 300 a month going out; pounds 100pm on clothes; pounds 500 a month on car.

Debt: pounds 7,000 car loan; pounds 1,000 on Barclaycard; pounds 1,500 company loan.

Savings: pounds 100 a month into Barclays regular savings account.

Save when you're winning AGED just nine, West-Ham-mad William Mathew already has a level-headed approach to money. When he pocketed pounds 85 in a recent World Cup sweepstake, half went on buying his team's away kit, but the rest was tucked away in his Woolwich savings account.

While mum, Sandie Robbie, says her son is sensible with cash, she's keen to impress upon him that the family's resources aren't endless and that money has to be earned through hard work.

"I'm old-fashioned in that I won't tell my son what I earn, but I will make him aware of the limitations of the amount we have."

Sandie, 50, who lives in Wanstead and works for Transport for London as a technical administrator, says her son is a rare breed in that he sometimes forgets he hasn't had his pocket money. While some parents might take advantage of this, she uses the opportunity to encourage the savings habit, giving William money to put aside for this year's family holiday to Portugal.

Kerry adds: "Scott can only save a maximum of pounds 3,000 a year into his mini cash Isa, so he could take out another account. Abbey National's eSaver account pays consistently competitive interest rates, currently 4.17 per cent."

Scott should also reorganise his debts.

Nikki says: "I doubt he can do much about his car loan as he will probably have to pay the same interest whether he pays it now or over the 10 months left on the loan. But he should switch to a credit card like Egg, which is interest-free until next January, and pay off what he owes."

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