Whenever 12-year-old Emalee and 9-year-old twins Madison and Jackson Warren receive money, they immediately divvy it up into three envelopes.

Ten percent goes to their church.

At least another 10 percent goes into savings.

And the remainder is theirs to spend as they choose.

Their parents, Robert and Darci Warren, operate under a similar financial system — except their envelopes are for bills, charity and savings.

It’s a lesson that has become a habit.

A lesson that will serve them well in the future.

A lesson more kids — and their parents — need to understand if they ever want to be financially secure and independent, say financial experts.

Yet more than half of all high school seniors graduate without basic money management skills,  according to the annual survey by Jump$tart Coalition, a group dedicated to improving financial awareness among students.

Frequently, money woes and fiscal fiascos continue generation after generation.

Money Momma (a.k.a. Lori Mackey) recognized that seven years ago, when her children were just 5 and 7.

“We were clueless when it came to money; it was spend, spend, spend,” confessed the Agoura Hills, Calif., entrepreneur. “We would give our son a dollar and he would spend $5. My daughter would never spend her own money for fear of being without money.”

Mackey didn’t have to look far to see where those money issues started: Dad the spender, Mom the saver. Together “we have done everything you can possibly do wrong” when it comes to money management, Mackey said of herself and her husband.

But when she realized they were passing that legacy on to their children, she set out to reverse the trend and teach them  how to save and invest.

When she couldn’t find the information she was looking for, she created it herself and started www.prosperity4kids.com.

First she bought three little piggy banks and one bigger one. The kids dubbed it Money Momma. Each little pig held a 10 percent share for savings, investing and charity. The remaining 70 percent was theirs to spend.

What she likes about the 10-10-10-70 plan is that it works regardless of whether your child has $1 or $50.

And it is easy enough — as well as painless enough — to transform into a lifelong financial habit. And a legacy she hopes will be imparted to future generations.

Why is money so hard?

It is hard to teach children about money, said Angie Schreiner, vice president of marketing for Liberty First Credit Union.

Schools and financial institutions offer lessons for children.

But the trouble comes at home, where many of us are clueless when it comes to managing, investing and spending our money.

If we don’t know how to handle money, we can’t teach our children how to manage it, Mackey said.

The first thing parents need to do is start talking about money.

“The light needs to be turned on and shined on the whole situation and issue of finances,” said Marlena Jareaux, author of the newly published children’s book “26 Financial Things to Teach Your Parents.”

“It’s not necessarily that parents are doing things wrong, but there are a lot of parents who aren’t doing anything. They are thinking the same way their parents did when they were growing up — that you will pick it up along the way,” she said.

The reality is, kids don’t pick it up.  They don’t don’t know how to make it work.

And our silence lets society give kids a message that encourages them to spend and borrow, Mackey said.

“We (parents) think we have to put on this appearance to our children that we are strong, we know everything, and nothing gets us down,” Jareaux said. “But we are not doing our kids a service by not including them and letting them know what is going on in life and how it operates in the financial world.”

Parents need to begin teaching money concepts from the moment their children start counting. And parents need to show their children how to handle money even earlier, said Tory Warrick, parent of 19-year-old Lauren and 12-year-old Madie and vice president of Cornhusker State Bank’s retail division.

“We hold financial discussions regarding the (family) budget,” Warrick said.

Warrick’s children know the family’s financial status, goals and concerns. They are familiar with the family budget, bills and disposable income. They know what it takes to save for a family vacation or big family purchase.

Money lessons

The average American spends 131 percent of his or her disposable income each year, Mackey said.

About 20 percent to 30 percent of our annual income is spent on “impulse buying,” according to  national statistics.

It doesn’t take a math wiz to see the debt we are racking up.

Kids need to see there are other things to do with money besides spend it, Mackey said. They need to see the benefit of saving and the even bigger benefit of investing.

“A lot of children think saving money means they have less money,” she said. “But you are going to have more money if you save and invest money.”

To help children see how that happens she created the allowance chart “It’s Only $1 … Until You Add to It.”

And they need to know they should never spend 100 percent of what they make.

 Children also need to learn the value of giving to others, said Angie Schreiner, mother of Noah, 7, and Aaron, 4, and vice president of marketing at Liberty First Credit Union in Lincoln.

The Schreiner kids give 10 percent of their money to the church. They put half of what’s left in savings and get to spend the other half.

Noah doesn’t always like it, “but he gets it,” Schreiner said.

And the Schreiners never shy away from showing their children how money works in real life. When Noah pleads for a can of ravioli at the grocery store, his mother shows him that the cost of that can is almost the same as it will cost to feed the whole family a homemade meal.

And when Noah grumbles about a bad day at day care, she points out how she has to work to make the money to pay for his day care.

“I’m teaching him everything costs something and you have to make the best of what you get, whether you want to or not,” Schreiner said.

The value of moneyOne of the toughest concepts to understand is the real value of your money.

Often children think of it as “just $1” or “just $20” — especially when it’s their parents who are footing the bill.

“Kids really have no problem spending their parents’ money,” Jareaux said. “But the instant you give them their own money to spend, they will hold onto that money more.”

It’s amazing how that must-have item loses its allure when your child pays out of his or her pocket, she said.

Warrick recounted how 12-year-old Madie protested when her cell phone bill came with an extra $9 in downloads. Madie was told she had to pay for it. She didn’t want to. Her argument: “Then I will have to subtract it from my account,” Tory Warrick recalled.

“When they have to have a direct investment and physically give up cash from their pocketbook, they learn,” Warrick said. “If mom buys it (cost) doesn’t matter. I also find kids take care of things when they have to contribute financially.”

Robert and Darci Warren require their children to pay the total cost of their purchases — including sales tax — which means that the $10 toy they want will ultimately cost them more than what’s posted on the price tag. If they don’t have the cash to cover the tax, they have to wait to make the purchase, Robert Warren said. On the rare occasion he lends them the tax money, it comes off the top of their next week’s allowance.

The lessons get more expensive as kids get older, Tory Warrick said.

Nineteen-year-old Lauren Warrick is about to move into her first apartment. She thought the rent was a great deal, but then she factored in other costs — cable, Internet, parking, washer, dryer, etc. By the time she factored it all in, she was spending another $100 in addition to her rent, Warrick said.

The good thing about teaching kids about money is that they will pass their wisdom on to the the next generation, Jareaux said. And perhaps those kids will not have the same struggles as people have today.

16 ways to teach your kids about money

1. As soon as children can count, introduce them to money.

2. Be a good money role model. Show children how to save it, make it, grow it and spend it wisely.

3. Show kids the family budget. Teach them how to make their own budget.

4. Help kids learn to tell the difference between needs, wants and wishes.

5. Teach children to set goals, save for something they want and for the future.

6. Introduce children to the value of saving over the satisfaction of spending — especially on credit.

7. Show children the value of investing a portion of their money. Let them buy a share of stock in a company of their choice and watch their investment grow.

8. When paying an allowance, give it in denominations that encourage saving. Rather than giving a $5 bill, give all ones so kids can easily divide it between savings, investing, charity and spending.

9. Take children to the bank or credit union and have them open a savings account. Have them tour the facility.

10. Keep good records of money saved, invested and spent. Have kids keep all of their receipts in an envelope. Each month have them see how much they spent and what they spent it on.

11. Take children shopping with you. Let them see how much you spend, the value of using coupons and the cost of often used items such as milk, bread and cereal.

12. Allow kids to make their own spending decisions. Do not rescue kids when they run out of money.

13. Have kids do their research before they buy.

14. Teach children how checks, debit cards and credit cards work. Teach them about credit reports.

15. Help kids see how buying on credit can quickly increase the price of an item.

16. Hold regular family financial discussions so everyone knows the family’s needs and expectations.

— Sources: National PTA, Lori Mackey at www.prosperity.com, Marlena Jareaux at www.26thingstoteach.com

Reach Erin Andersen at 473-7217 or eandersen@journalstar.com.