he first thing kids learn about money is that it can buy the things they want. It doesn't matter where the money comes from - a birthday card from Auntie, washing the car or Daddy's pocket.

"Kids just want money, they don't want to talk about it, " says Neale Godfrey, a writer and founder of the First Children's Bank. "Who can blame them? This new generation is too busy being programmed to be superconsumers to have much time for learning how money really works."

Most schools do little to teach kids about money (sex is another story). Currently, high schools in only 14 states are required to offer instruction in personal finance. No wonder four out of five Americans are deemed "financial illiterates."

One group is so concerned about these money dummies that this spring it is launching an initiative called Financial Literacy 2001. It is the biggest initiative ever to educate high schoolers about personal finance. The group is made up of the National Association of Securities Dealers, the North American Securities Administrators Association and the Investors Protection Trust.

The group plans to train 15,000 public and private school teachers in all 50 states in how to teach the basics of personal finance and investing.

"My children didn't know how much money we had until they read about it when I was nominated in Washington," says former Treasury Secretary William Simon.

That was no mean feat. At the time, 1974, Simon was already a multimillionaire, unbeknownst to his seven kids who ranged in age from under 10 to nearly 25. Simon had become rich on Wall Street before his tour as Treasury secretary. Afterward, he became richer still.

But the Simon kids did have some clues. Dad required all of them to read Andrew Carnegie's Gospel of Wealth. "I passed it out and they read it two or three times," Simon says. "The main message was that money is a responsibility; maybe also a blessing or curse, but it was a responsibility."

Why did Simon keep his wealth a relative secret? For one thing, so his kids wouldn't contract "affluenza," that attitude of entitlement and lack of ambition that can come when kids are overindulged; or if they believe they will one day inherit so much money they will never have to work. Note: Affluenza is not only transmitted by rich parents; overindulgent ones spread it as well.

One reason Simon's children didn't think of themselves as rich kids was because they had to work. "I thought having an allowance was a good idea but I felt they should supplement it by working," Simon recalls. " They'd mow lawns, rake leaves, shovel snow, wash windows or wash cars."

Every family has basic household chores that need to be done, and all kids should have to help out. "They're citizens of the household," says Godfrey. "The chores are part of a child's role as part of the family." Kids also need to learn how to take care of themselves. (If you use a cleaning service at home, tell the cleaners your kids will do their own rooms.)

When kids are old enough, working at a real job is similarly valuable. "It's important for kids to apply for a job on their own, without parental influence," says John Levy, a San Francisco-based counselor to the wealthy. "There's something magical about the first paycheck you get; someone has found your services worth paying for. It's also important for young people to know they can support themselves."

Weekly allowances can be useful tools for teaching kids about spending and saving. "I recommend paying kids their age - a 12-year-old gets $12, and so forth.

"You divide the allowance into four jars," Godfrey advises. " First, 10 percent comes off the top and goes to charity, then you split the rest of the money into thirds." One-third goes to quick cash - that's for instant gratification. One-third goes to medium-term savings (such as saving for Rollerblades or some coveted game). The last third goes to long-term savings, such as college.

It's important to allow the kids some money for spending. "If you don't allow them to spend you take away the incentive for saving," says Paul Richard, director of education at the National Council for Financial Education. One quick tip: Hand out allowances in denominations that are easy to split up for saving. "If the allowance is $5, give five one-dollar bills. It makes it easier to put some away," Richard says.

Bite your tongue when you see your young child wasting money. "You have to allow them to suffer through poor spending decisions," says Richard. "It's better that it happen when they're younger than when they're teenagers or young adults. When they make foolish purchases you might ask them later if they would still do things the same way, and talk about how they might have saved money. "

While you don't have to worry about teaching kids the joys of spending (Mother Nature and Madison Avenue have teamed up to guarantee that) you do need to teach the basics of comparison shopping. Let the kids clip grocery coupons from the newspaper on products you need or regularly use. Give them 25 percent or 50 percent of what you save in coupons as a commission.

Investments can be more fun than chia pets for kids, and they will grow a lot longer. Some elementary schools have bank-at-school programs, where kids can make weekly deposits into real live, interest-bearing savings accounts. A more capitalist alternative is to give a kid a few shares of stock in a company that makes products kids use. Then he or she can track the stock's movements and calculate gains (and losses).

A better plan: Give them an incentive to save their own money. Sort of a "kiddie" 401(k) plan. Says D.J. Shah, a Weston, Mass.-based financial planner, "I told my kids that if they saved to invest in a mutual fund, I would match whatever they saved. My son wanted Nintendo 64, but he decided he could wait a while for that, and invested instead."

Warren Buffet is known not only for his $15 billion fortune, but for his oft-repeated intention of leaving his three grown children very little of it. It's for their own good, Buffett says. Large payments to his children or a large inheritance would be an obstacle to them leading a normal, independent life.

Is he a closet skinflint who is begrudging his kids their due? Buffett's problem is hardly unique. Many parents have estates and the kids are often the logical inheritors. Like Buffett, there are a number of billionaires who fear that money coming easily to their kids can only spell disaster. Buffett likens trust funds or large payments to "privately funded food stamps."

Buffett does give his three adult children and their spouses $10,000 gifts at Christmas, and reportedly will leave each of his children $3 million or so each. The rest will go to charity.

By all accounts, Buffett's children have adjusted to the rather puny inheritances, and there is a growing number of billionaires who are in Buffett's camp. Bill Gates will reportedly give $10 million each to his baby daughter Jennifer and her future siblings. The rest (currently about $19 billion) will go to charity.

Not every multimillionaire shares that view, however. Former Washington Post CEO Katherine Graham has already turned over the publishing crown to her son.

And Laurence Tisch, former owner of CBS, plans to leave his estate to his kids.

For folks with less to bequeath, the problem is just as real. Says Godfrey: "The way I look at inheritance is that you've raised these children to be financially responsible all their life. My children have selected careers that aren't going to yield a lot of money; actress and zoologist. They shouldn't be punished because they decided not to be investment bankers. If I can subsidize that, fine. A lot of people pick a career because they want the money; like doctors who are doctors only because they want to earn a lot of money.''

One thing everyone does agree on is the folly of a child coming into an inheritance too young. "Inheritance should take place after some level of school is finished; not before age 25," Godfrey says. "At that point a level of accomplishment has taken place."