Start teaching kids about money . . . now!

Last week's reader question about saving for college got me thinking about how much — or should I say how little — the average American child knows about money.

And how important it is for us, as parents, to try to teach them.

This is a topic that seems to be finding a more prominent spot in our national conversation, as shown by comments Federal Reserve Chairman Ben Bernanke made during a Senate Banking Committee hearing last week.

According to an Associated Press story, the Fed chief said Americans need financial know-how so they can make smart money choices, whether they are buying a home, financing an education, saving for retirement or starting a business.

And those skills need to be passed on to today's youth, especially when you consider U.S. high school seniors answered correctly only 52.4 percent of questions about personal finance and economics on a recent survey.

But many parents wonder where to start when it comes to financial education.

This is a challenge for me. I have four children ages 8 and under, and their grasp of basic financial concepts varies wildly.

My 8-year-old understands that I go to work to earn money that we then use as a family to supply our basic needs. She has a savings account, and she knows she needs to control her spending if she ever hopes to have enough money to buy the iPod she desires.

My 5-year-old and 3-year-old see money as something that is most properly used to buy candy and/or stuffed animals. And as for my 6-month-old, well, if I gave him any money, he'd just try to eat it.

But I do want my children to grow up with financial smarts. So, for a few tips on how to point them in the right direction, I called John Bird, president of Salt Lake-based Albion Financial Group.

John says studies show that, by the time most children are 13, they have developed the money habits they will keep throughout their lives. But research also indicates that 81 percent of parents who feel they do a fair to poor job of managing their own finances think they are effective at giving financial advice to their children.

Put those statistics together and you have a recipe for disaster.

"Parents need to not only educate themselves about financial planning to teach their children, but they've got to put into practice what they learn," John says.