(MONEY Magazine) – Parents have always worried about their children's financial future. But you have to be a mom or dad of the '90s to understand just how much there can be to worry about. How, for example, do you preach financial responsibility to a generation that is growing up watching an average of 450 TV commercials per week? Yet today's kids need financial know-how more than any in recent memory. Many will reach adulthood in what forecasters say will be a singularly unforgiving economy, marked by a brutal job market, stingy investment returns and the crushing burden of the baby boom's Social Security. Indeed, the unemployment rate for 20- to 24-year-olds already runs 10.4% -- higher than for any other adult age group -- and an alarming 43% of that cohort still live at home, according to the Population Reference Bureau, a demographics research firm. Says Paula Luciani, head of the Fairfield, Conn. money-management firm Charter Research & Investment Group: ''Today's parents are increasingly concerned that their children will never live as well as they do.'' Though there is cause for concern, don't despair. The American dream can still come true, but it's up to you to teach your kids the skills and discipline they'll need to make it come true for them. (To register your views on the best ways to do so, fill out the poll questionnaire on page 156.) Brace yourself, though: Today's kids have a lot to learn. A 1991 study by Jerry Mason, associate professor of financial planning at Texas Tech University, found that high school students know less about financial topics than their counterparts did 30 years ago. Mason thinks schools deserve only part of the blame. ''Most parents aren't terrific at managing money,'' he says, ''so kids don't learn money skills at home either.'' Today's youngsters have an uncanny knack for spending the stuff, however. Last year, teenagers shelled out a whopping $93 billion, according to market research firm Teenage Research Unlimited. Most went for food, clothes and entertainment. Though most teens say they want to put away funds for college, more than half save nothing at all. Of course, your kids' financial education should begin long before they start thinking about college. Indeed, experts say that children grasp the concept of money as early as age three. The following age-appropriate rules will help guide you through your kids' financial education. Start the process before they begin school, and be prepared to keep it up through college -- or, if you're one of the unlucky ones, even a few years beyond.

GRADE SCHOOL AND YOUNGER Become a model money manager. At any age, your kids will be influenced far more by what you practice than by what you preach. ''If you tell your kid not to spend too much money while you go out and buy a second Mercedes for yourself, your kid will notice,'' says Kenneth Doyle, a financial psychologist on the faculty of the University of Minnesota. So your first task is to set an example worth emulating. Your child will benefit -- and so will your finances. -- Give your child a regular allowance. Although managing an allowance is the key to developing good money skills, fewer than a third of all children in the U.S. receive one. You can start a weekly stipend as early as age five or six. While child development experts differ on the matter, many recommend that you neither offer the allowance as payment for chores nor withhold it as a punishment. ''The allowance is a learning tool that should continue without interruption, so the child can learn to budget and save,'' says Martin Ford, professor of education at George Mason University in Fairfax, Va. ''Children who get an allowance for doing chores learn they should do things only for money.'' Insist that your child do chores simply as part of his or her family duty, and when you need to discipline the child, take away other privileges. Experts do recommend encouraging your kids to do additional chores for extra money, however. How much allowance you should give depends on your family's financial situation, local living costs and what your child's friends are receiving. But make the amount large enough to be meaningful. Says Neale Godfrey, author of the Kids' Money Book (Checkerboard Press, $12.95): ''Your child should be able to buy something -- a few candy bars or a toy -- without hoarding for weeks.'' A Rand youth poll, for example, found that last year the average 13- to 15- year-old received about $15 a week, while 16- to 19-year-olds got nearly $30. Be prepared to raise the amount yearly. -- Encourage saving. By age eight or nine, children are old enough to save a portion of their allowance. You can encourage the habit by matching whatever your kids put away. You should also help them open a bank account where they can watch interest build up on their savings. You will probably have to cosign to open the account, and you may also have to prime the account with some of your own money to get around the steep minimums that banks require today. -- Find opportunities to describe how money works. Look for opportunities to explain money to your kids -- and the more involving the lesson, the better. ''Saying something is too expensive means nothing to a child,'' points out Godfrey. You might instead note that an expensive toy costs as much as a week's worth of groceries. With children age 12 or 13, you might invite them to help you pay the bills a few times to demonstrate where your money goes.

TEENS Gradually give your teen a larger allowance and a freer rein on spending. The early teens are a good time to switch from a weekly allowance to a monthly one, so your teen will learn to budget money over longer periods of time. You should also increase the allowance to allow him or her to cover most, or all, spending for clothes, fast-food meals and so on. Susan and Richard Filloy of Eugene, Ore. (shown above) went further. Last year they began giving an annual allowance of $425 to each of their two children, Amanda, 16, and Nicholas, 14. ''We were tired of trying to keep track of how much we had given the kids and when,'' says Richard. ''We thought they were mature enough to learn from long-range budgeting.'' So far the teens, who keep accounts at a local bank, have handled their lump sums successfully. As much as possible, let your children spend their money as they want. Don't fret if they occasionally blow three months' allowance on glow-in-the-dark sneakers and the like. ''Kids need to make mistakes to learn,'' notes Ford. ''Setting narrow rules for how they can spend defeats the purpose of the allowance.'' Of course, there may be times when you need to step in for the child's good. The Filloys, for example, refused to let Nicholas buy a TV for his room. Says Richard: ''We didn't want our kids spending all their time in front of the tube.'' -- Teach basic investing concepts. One great way to begin, says Nancy Dunnan, author of several finance books for teens, including The Stock Market (Silver Burdett, $6.95), is to buy your child a share in a highly visible local company, such as a utility or a brand-name product manufacturer, if there is one nearby. You can then show your child how to follow the stock in the newspaper and maybe even tour the company. -- Help your kids broaden their experience and develop good work habits through summer jobs, travel and part-time afterschool work. In particular, don't let your kids waste summer vacation. ''By planning ahead, you can make sure your child does something interesting and enriching every summer,'' says David Denman, an educational consultant in Mill Valley, Calif. ''It's hard for your kids to decide what they want to do in life if they know nothing of the world beyond the mall.'' Among his suggestions are foreign exchange programs, inner-city volunteer projects and summer camps. For more ideas, check the guidebooks Summer Opportunities for Kids and Teenagers ($19.95) and Summer Jobs ($15.95; both from Peterson's Guides). Traditional afterschool teen jobs, such as working a fast-food counter or retail store, can also help build responsibility. But don't let your child work too many hours. A study by Laurence Steinberg, professor of psychology at Temple University, found that teens who worked 20 hours or more after school each week achieved grades half a letter lower, on average, than youngsters who worked fewer than 10 hours. ''Kids are sacrificing their chances of getting into a good college simply to pay for cars and clothes,'' he warns. -- Discuss how your family will pay college bills. During junior year in high school, your child should begin learning about how you plan to pay for his or her college education. Begin sharing details of your family budget with your child. Of course, you have to judge whether your teen is mature enough to keep the information confidential, but in most cases, your children will benefit from a dose of reality. ''When kids understand the limits of the family pocketbook, they are more likely to take college and their grades more ! seriously,'' points out Kenneth Davis, author of the excellent Kids and Cash (now out of print but available in many libraries).

COLLEGE AGE Make arrangements for your child to receive cash and talk about how the finances will be handled. Set up an account at a bank near your child's college, so you can wire money as needed. You may find it convenient to hand over a credit card as well. But before your child leaves for school, specify what the money and credit card will cover -- emergencies or plane tickets home, for example, but not pizza for the entire dorm. If your child isn't living up to his end of the bargain, say no and mean it. For example, John and Ronni McGlenn of Bellevue, Wash. (pictured on page 73) agreed to pay their kids' on-campus living expenses as long as they maintained a 3.0 grade point average. When son Andrew's average fell below the target at the University of Washington, his parents refused to pay his fraternity costs and Andrew moved back home. By contrast, his sister Katie, a zoology major, maintained a 3.0 average, and her parents continued paying her sorority bill. ''It bugged me to see how much financial support Katie got, but they were right,'' says Andrew. He got his grades back up, moved back onto campus and is finishing a major in geological sciences next year. -- Think twice about requiring your child to work long hours during freshman year. Kids are most likely to drop out of college in their first year, most often because of problems adjusting. It makes sense, therefore, to spare your freshman a heavy part-time work schedule. One possibility: front-load your support in the first two years, and let your child contribute more later. -- Make sure your child is thinking about career possibilities. Encourage your child to start researching careers as early as freshman and sophomore years. As a student, your child can make contact with alumni and other professionals who can tell him or her what their professions are really like -- and who may later be helpful in finding a job. A big plus is internship programs, in which colleges help students land summer jobs related to their field of study, and co-op programs, in which students alternate a year or two of study with one or two semesters of work. Such experience can be key to getting a job. Companies that hire interns currently draw 17% of their new hires from their former student workers, and many are planning to raise that figure to 50%.

BOOMERANGS $ Say you've shelled out $100,000 for Junior's college education, you turned his old bedroom into a study, but now he's back on your doorstep, jobless, with plans to stay indefinitely. If you've got a so-called boomerang kid under your roof, here are some tips for helping him or her achieve financial independence: -- Set ground rules. ''Above all, you want to avoid returning to the old parent-child pattern, where you do the laundry while the kid vegetates in his room,'' says psychologist Doyle. Discuss in advance whether the child will pay rent or a share of the family's costs. If he can't afford to pay anything, he should at least contribute to household chores. You should also set a date -- say, in six months -- when you both will assess the situation. -- Don't try to land your kid a job yourself. Calling an old pal and arm twisting him into giving your child an entry-level position won't help in the long run. ''Contacting potential employers on your child's behalf will do nothing for your child's self-esteem and may simply diminish his worth in the employers' eyes,'' says Nella Barkley, author of How to Help Your Child Land the Right Job (Workman Publishing, $9.95). Thus you might help your child revise a resume or rehearse for an interview, but he should do his own phoning and interviewing. The goal, after all, is independence. That means your kids must be free to succeed or fail on their own.

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KIDS WHO NEVER LEARN to handle money have a way of showing up later on their parents' doorstep, with poor prospects and no plans.