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Teaching Kids to Mind Their Money

By Susan Marks America's teenagers spend billions of dollars annually -- $172 billion in 2001 alone. That's $104 per week, per teen, says Teenage Research Unlimited, counting both the money kids spend on themselves and the parental bucks they handle for family tasks like grocery shopping. If that number sounds scary, here's what's scarier: Surveys say teenagers know almost nothing about how money works. So where are they going to find out? From their parents, they say. But with record bankruptcy filings and historic levels of credit-card debt, maybe that's not such a good idea.

A new Web site called hopes it can fill that educational gap. This joint effort of Northwestern Mutual Foundation, the nonprofit arm of the life-insurance giant, and the nonprofit National Council on Economic Education aims to teach Finances 101 to kids. It's a textbook of the basics, aimed at 12-to-19-year-olds. It's like a lot of books out there, but better in some ways because it's online and makes nifty use of calculators and other software tools to turn learning into fun. The Mint gets high marks for striking the right tone: It treats a heavy subject lightly, but without being condescending.

More kudos for sticking to information and education: The site doesn't sell financial products and doesn't feature ads. Many adults could benefit from its simple tutorials. The Mint could do more, and its content could be deeper. But it's useful enough now, and it seems to be heading in the right direction.

RICHIE RICHES. The Mint is divided broadly into major categories: Earning, Saving, Spending, Tracking, Investing, and Owing. Each section goes into detail, with explanations and tips, with "Try It" sections offering quizzes, calculators, and simulations to put some entertainment into what would otherwise be dry lessons. There are eye-opening explanations on such topics as where a pay check goes, explaining both the impact of taxes and what it costs to live on your own. The site also features games, where users can test their wits on questions like how long it takes to pay off a high-rate credit card debt.

Kids with a bent for business will enjoy software features that explain the kinds of investing choices they would need to make to become millionaires. For the rest of us, The Mint has data on occupations and what they pay entry-level workers, advice on saving and investing, and insight into managing debt. It's an interesting set of tools.

The Mint does have some weaknesses, though. It does too little to introduce its users to the concept of risk -- a tough yet essential lesson, as many families have learned all too well during this bear market. Here, The Mint could take a cue from Young Americans Bank, a Denver-based non-profit, that offers a similar online calculator.

UNREAL RATES. Instead of just listing the options, Young Americans Bank breaks them down into Safe Bet (savings account), Minimum Risk (bonds), Some Risk (mutual funds), and Take Your Chances (technology stocks). Granted, balancing risk and reward is a pretty advanced financial lesson -- one that seems to have eluded a few of Wall Street ex-billionaires these last few years -- but The Mint should still have done better than it does.

Another thing I found odd is that The Mint often quotes unrealistic rates of return, which could give its users a distorted picture of how easy saving, investing, and compounding are. Its "When Will You Be a Millionaire?" quiz and its compound-interest calculator use default settings pegging savings account interest at 3%, certificates of deposit at 4.9%, money-market accounts at 4.48%, and Treasury Bonds at 7.86%. Its 8.3% average return on mutual funds, or the 12% returns it uses as a default level for the stock market, don't exactly seem conservative these days.

Finally, I'm not sure The Mint has enough bells and whistles to hold its core audience's attention. There's little animation, color, and audio on the site. The software calculators and other interactive features are a start, but if the point is to engage with the teen generation through the kind of media kids already use and enjoy, The Mint doesn't go far enough.

PRACTICAL HELP, PLEASE. I'd like to see the site give more specific advice about how to apply its money principles to real life situations. Under the category Saving, for example, there's no guidance about how to choose a bank or the pros and cons of different institutions, like credit unions vs. savings banks. That's concrete stuff we all need help on, no matter how old we are. The site isn't totally lacking in this department: Its helpful "Did You Know?" tips, which run on the bottom of each page, are practical, real-world stuff for the high-school set. A sample: "At 60 cents to 75 cents a can, vending machine soda is costly. Buying soda at the grocery store could save $72-$99 a school year."

The Mint is certainly a useful resource for any beginning saver or investor, not just teens. It needs some work, but if you head there expecting the basics and maybe a bit more, you'll be rewarded. Marks writes on technology and personal finance from Denver

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