DOES TEACHING good money habits really matter? How can you train your child to better manage his or her finances? In 1981, pollster Lester Rand of the Rand Youth Poll found that there has been a steady erosion of a simple but vital monetary habit called thrift: making one's money work its hardest. Says Mr. Rand: "Our young used to be told that a penny saved is a penny earned, and to save for a rainy day. That is not the pervading philosophy today. Young people in this country [the U.S.] are being raised to spend" (emphasis ours). In the 1981 poll, Rand found that 65 percent of the 3,091 teens he interviewed nationwide seldom or never heard thrift discussed in their homes. Only 25 years earlier, a similar poll revealed that 69 percent felt that thrift was mentioned "a great deal" in their homes. U.S. teenagers in 1980 spent nearly $40 billion for records, tapes, cosmetics, stereos and other goods and services. Mr. Rand's poll revealed that 69 percent of these teenagers felt that they were gullible as consumers. Many found that the purchases that they made were simply unwanted later on. On the other hand, only 41 percent of the teens surveyed in 1956 considered themselves gullible. What's behind this change in attitude? Part of the answer is an inflationary psychology that was built up worldwide over the past half decade. In essence, teens — like many adults — have developed a spend-it-now-because-it-won't-buy-as-much-tomorrow mentality. Its more basic roots lie in the home with the parents' example or lack of it. This is reflected in another of Rand's questions. When asked if their parents are thrifty, 67 percent of today's teens in the United States said no. In 1956, 56 percent felt that their parents were thrifty. A major part of being frugal involves wise budgeting. Budgeting is merely establishing a fixed — and priority-spending framework. One priority in any budget should be savings. Mr. Rand's poll results on the question of parental thrift reveal a lot about U.S. parents. In a comparison of savings as a share of disposable personal income in 1981, the American saver saved the least of the six nations compared. The average American only saved 5.3 percent of his disposable income, compared to 10.9 percent for the Canadian, 14.2 percent for the Briton, 14.9 percent for the West German, 16.1 percent for the Frenchman, and 19.4 percent for the Japanese. The problem becomes worse when you add another set of statistics. In 1981 in the U.S., 456,514 individuals filed for bankruptcy. More than $6,000,000,000 was left unpaid to creditors. Couple poor savings habits with the impulse buying habits that pervade U.S. consumerism and throw in general money mismanagement, and it is easy to see why the example put forth by American parents does not instill thriftiness in children. How, then, can you teach your children about managing money in a way that will stand them in good stead for the future? Even while your children are small — 3 to 6 years old — you can begin teaching them about money. On this point, the words of Solomon ring true: "Train a child in the way he should go, and when he is old he will not turn from it" (Prov. 22:6, NIV). Take your children along with you when you go shopping. Explain to them why you buy the things you do. Teach them to get the most for their money. The Plain Truth has long admonished readers to buy the best quality — of any item — that is affordable. This applies to everything from good wholesome food to fine durable clothing. When dealing with preschoolers — 4 to 5 years old — begin to teach them how to count money. Teach the importance of giving and receiving the proper change. As your child grows older he will have been exposed to money and the things it can buy. Now is the time to consider an allowance. It is important to sit down with your child and let him help determine his allowance with you. This will help him learn the rudiments of budgeting. One important consideration in providing an allowance is to be consistent. After all, few adults would like to have erratic incomes. The benefits of an allowance are twofold. First, a regular allowance can eliminate children's attempts to manipulate their parents to get money or gifts. And second, children who are given allowances tend to be careful spenders. Later on, discuss the advantages of a savings account with your teenagers. Help them plan some financial goals: perhaps for a bicycle, a stereo, a vacation or college. Finally, involve the whole family in the household's budgeting process. This will help your children learn about budgeting, as well as give them a clear idea of their family's financial picture. The latter experience can encourage family unity in times of financial crisis and help children understand the adult financial world much better. If these few suggestions are followed or adapted to your particular situation, then when your child takes his first summer job, he will be better prepared to handle the money he will earn. He will have had years of experience in building wise spending, budgeting and saving habits. And you will have the satisfaction of having given your child a good foundation of financial knowledge. That knowledge will help your child deal with his future and avoid the financial pitfalls that have ensnared so many today.