Some readers may still remember when they got their first savings bank passbook and used it to save on a regular basis, watching their savings mount, interest accrue (there were no accountkeeping fees then) and dealing with a real teller to withdraw money.

Of course, that was before the arrival of credit cards when money could only be spent if there was some in the account.

That was only a generation ago, but it is a world unfamiliar to generation dotcom.

With savings books and tellers virtually disappeared, children today can be forgiven for thinking that money comes out of a hole in the wall - just insert a plastic card. Some children don't even bother to ask for money; they simply approach their parents and push buttons on an imaginary ATM to communicate their desire for cash.

It is little wonder that students and young employees have no idea of how to manage their money. They are used to asking for an allowance and getting it. Some have access to a supplementary credit card well before they have learned to handle cash, let alone credit. The connection between earning money and spending it is also lost on many, while monitoring cash flow can be a foreign concept.

In fact, for a lot of young people the dynamics of financial management are a complete mystery and few parents are prepared to sit down and explain the basics of earning and managing money to their children before it is too late.

Neil Fairhead faced this dilemma when his son was growing up, and formulated a concept to try to teach him about money without making it a tedious lecture.

Mr Fairhead has 15 years of experience in financial services, advising adults on strategies to get themselves out of debt and start creating wealth for their families.

Over time he realised that many of the financial problems his clients encountered resulted from financial illiteracy and could easily have been avoided if someone had taken the time to teach them a few basic principles from an early age.

Mr Fairhead did not want his son to learn about managing money the hard way, so he designed a basic financial management product that is fun, simple and interactive.

It's called Pocket Pal and will take children as young as five through the essentials of money management in an engaging way. With Pocket Pal, the parent becomes the employer, bank manager, tax collector and insurer and teaches the child how to best deal with these and help them avoid future financial pitfalls.

Mr Fairhead's premise is that those who learn good moneymanagement skills are more likely to become adults who make sound financial decisions, avoid excessive debt, manage income and expenses and reach their financial goals.

The pack, which is being marketed through schools, financial institutions and mortgage brokers, including the Money Store, consists of a folder containing a savings passbook, cheque book, credit card, incomeprotection insurance policy and, most importantly, a job rate card.

The job rate card is the first step. Instead of children asking their parents for money, the rate card enables them to negotiate payment for tasks performed. The rate card will list all the jobs that can be done, such as washing the car ($3), putting out the rubbish ($1) or mowing the lawn ($2.50). The negotiation process for these jobs teaches children the elements of bargaining in the workplace from an early age.

The job card is next. This card is completed weekly, detailing the date and the job performed and is signed off by the parent at completion. The total is calculated, along with tax, at a simpletocalculate rate of 10 per cent. The tax is not actually paid, but is there to demonstrate that in the real world the taxman wants his cut.

At the end of the week when Emily or Tristan are supposed to be paid, the money due to them is entered into the chequebook (which looks like a real one), with details of the transaction and the amount of the payment entered on to the stub.

This enables Emily/Tristan to view how much money is in the account, the amount withdrawn and the balance remaining.

An optional extra is incomeprotection insurance policy, which, for 5 per cent of each job payment, provides income replacement if Emily/Tristan is ill or breaks an arm and cannot work for a period.

If there is $20 in the account and Emily/Tristan wants $50 for a concert ticket, the credit card can advance the additional $30, but charges interest at the rate of 5 per cent. This is a lot less than the current creditcard rate but it is a good way of pointing out that buying goods and services on credit is more expensive and takes longer to repay.

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