Are Your Kids Normal About Money?
By David Futrelle

(MONEY Magazine) – Sure, they're cute, at least for a while. But raising kids right can be an expensive business--and a tricky one. You hope to give them what they need, and some of what they want, but not so much that you spoil them. You're eager to provide every advantage, but you want to teach them to be self-sufficient too. This quiz will test what you know about kids, money and this delicate balancing act--and offer a few tips to help you boost your child's financial savvy.

1 At what age do children start to develop "brand loyalty"?

A. Six months old B. Two years old C. Four years old D. Seven years old

ANSWER: B. By the age of two--really, two--kids can recognize a favorite brand on store shelves and let you know they want it, with words or gestures, says James McNeal, a former marketing professor at Texas A&M. (In fact, his research shows that babies as young as six months are able to recognize some corporate logos and mascots.) Once the brand lightbulb goes off, children quickly learn the art of the nag: Kids ages four to 12 influence--that's putting it nicely--an estimated $300 billion of their parents' purchases annually. That's nearly as big as last year's $319 billion federal budget deficit.

If you find it as tough to say no to your kid as it is for politicians to nix budgetary pork, try giving him a specific dollar amount to spend when you're at the store--and let him figure out what's worth buying and what isn't. Better yet, let him stay home while you shop. And if he whines for something advertised on TV, tell him to put it on his birthday or holiday list. Chances are by then he'll have forgotten what he asked for anyway.

2 The typical American "tween"-- marketer-speak for the nine-to-14-year-old crowd--gets how much for an allowance each week?

A. $5.45 B. $7.22 C. $9.15 D. $24.45

ANSWER: C. $9.15, according to a survey by Nickelodeon and Youth Intelligence, which tracks youth trends. Many experts believe that allowances are a great way to teach kids how to manage money, and offer formulas to figure out how much to give--say, 50¢ or a dollar for every year of your child's age. But the rate should really depend on what, if any, expenses you expect your kid to pay. As your child gets older, you can make her responsible for more of her own bills, such as lunches at school, maybe some items of clothing and, certainly, recreational trips to the mall. That's presumably why the typical teen gets a cushy $50 a week from Mom and Dad. Whatever amount you decide to give, though, just make sure to clearly spell out the ground rules about exactly what expenses you expect your child to pay with the money.

3 High schoolers with jobs typically work how many hours a week?

A. 7 hours B. 12 hours C. 20 hours D. 30 hours

ANSWER: C. Close to half of all high school students have part-time jobs, typically working about 20 hours a week. That's probably too much. A part-time job can be a great way to teach a teen about the world of work. But only if it doesn't interfere with his real job, which is going to school. Studies show that kids who work 20 hours or more a week do worse in school, drop out more often and ultimately earn less as adults. So teach your kid this math: A student working 20 hours a week at $6 an hour--a typical wage for teens--nets about $4,300 during the school year. If he cuts back to 10 hours a week, devoting the extra time to studying (or sleeping), he might earn as much as $30,000 more in his lifetime, according to one study. Lose around $2,200 now, gain 14 times that later. How's that for a nice return on investment?

4 What proportion of teenagers don't know that loans need to be repaid with interest?

A. 35% B. 22% C. 12% D. 5%, and that's my final offer

ANSWER: B. Some 22% of teens don't understand that it costs money to borrow money, reports the Charles Schwab Foundation. That same survey finds that 25% of teens think financial aid will cover all of their college expenses. No wonder most parents, according to a Visa USA survey, think that high school grads are "totally unprepared" to handle their own finances. (To be fair, though, the same could probably be said of many parents.) As a result, if you haven't done so already, it's probably time to sit down for a heart-to-heart on money basics and give your teen a financial reality check.

5 What percentage of kids under age 10 have cell phones?

A. 1% B. 7% C. 12% D. 26%

ANSWER: A. Only 1%, reports the Yankee Group, a market research firm. But most won't be without a cell for long: About 40% of 12- to 15-year-olds carry them, with parents typically shelling out $50 to $60 a month for talk time.

Rather than treat a cell phone as an inalienable right, consider getting your teen a prepaid phone or a plan with a very limited number of minutes--just enough to stay in touch with you. Then if she wants to gab or text with her friends, make her pay for the extra privileges herself.

6 What percentage of 13- and 14-year-olds own stocks in their own name?

A. 2% B. 5% C. 15% D. 25%

ANSWER: D. About a quarter of young teens own stocks, according to a 2005 survey by Junior Achievement. But don't worry, they aren't sneaking out of school early to get in a few hours of day-trading at the local Internet café. Most kids got their shares as gifts.

Giving your child stock in a familiar company can be a smart way to introduce him to investing concepts--for example, you could talk about what factors might make the price go up and show him how to track his profits. But the same can't be said about the stock-picking contests held in some high school finance classes, which reward the student who makes the most money at the end of a month or a quarter. This encourages kids to think short term (and thus shortsightedly) about investing. For kids, as for grown-ups, the lesson should be the same: Slow and boring wins the race in the long run.

EXTRA CREDIT: How much is the Tooth Fairy shelling out these days for each tooth left under the pillow?

A. 50¢ B. $1 C. $2 D. $5

ANSWER: C. Around $2 a tooth, or more precisely, $1.78, according to an annual survey conducted by Securian Dental Plans, an insurance provider. That seems about right. Shell out much more, and Junior might be tempted to knock out his own teeth whenever he needs a little cash. Alas, we adults can look back wistfully at the days when we too got a cash bonus if stuff fell off of our body. Too bad there's not a Hair Fairy compensating us for the soggy follicles that have gone to the great shower drain in the sky.