LOS ANGELES — The current economic crisis is providing a teaching moment about the perils of financial ignorance for parents and their children alike.

Millions of Americans are learning the hard way about the pitfalls of teaser mortgage interest rates and runaway credit card debt. Sadly, their kids might be doomed to repeat the mistakes.

Financial instruction at home and in the nation's schools is skeletal at best, educators say. American youngsters who can Twitter, text and blog with ease are clueless when it comes to balancing a checkbook or understanding retirement savings.

"We've been going for years without that education, and it's one of many factors contributing to the whole mess we're in," said Karen P. Varcoe, a consumer economics specialist for the University of California.

The good news, Varcoe said, is that teenagers are keenly interested in learning about money. Arming them with fundamentals might help them weather the next recession better than their parents.

At an exhibition hall near Glendale recently, dozens of 11th- and 12th-grade students participated in a financial literacy program sponsored by the nonprofit educational group Junior Achievement. The hands-on event was an attempt to thrust teenagers into the grown-up world of budgeting and bill-paying. The students were assigned adult identities, with children and incomes, then required to navigate a host of financial obstacles, such as getting a mortgage and paying for medical insurance.

Steffy Sulub, 17, morphed into a 33-year-old married woman trying to make ends meet on $42,516 a year. Budgeting for a house and car, while still eating three times a day, is hard work, she discovered.

Sulub's own family is in tough financial straits, she said.

"It's kind of scary, thinking about doing this on my own," she said. "People our age are just let out on our own when we don't even know what to do."

It's a dangerous cycle, said Adam Levin, chief executive of consumer education Web site www.Credit.com: Parents are so pre-occupied with — or embarrassed by — their financial affairs that they don't have time to mentor their kids about money. Cash-strapped schools are struggling simply to teach the three Rs. And many businesses have no incentive to teach future customers how to read the fine print.

"Finance companies are better off with customers being financially illiterate," Levin said. "And financial literacy organizations have to scratch and claw for every penny — it's like going into battle with a weapon but no ammunition."

Many young people agree that acquiring good money habits and setting financial goals are critical to success, according to surveys and studies. But high school seniors correctly answered less than half of the questions on a 2008 test of basic finance knowledge, said the Jump$tart Coalition, a financial literacy group.

Nearly three-quarters of the 1,000 teenagers surveyed for Charles Schwab financial services company in 2007 predicted an average annual salary of $145,500 for themselves. But just 13 percent knew what a 401(k) plan was.

Just 7 percent of people aged 19 and 39 said they feel financially secure, according to a survey from the American Savings Education Council and AARP.

Last spring, more than 46,000 teenagers took a personal finance test from the Treasury Department, but only 35 students achieved a perfect score. Currently, only nine states require students to demonstrate proficiency in personal finance.

Paul D. Golden, a spokesman for the National Endowment for Financial Education, said his parents never talked to him about finance.

"Money is still a taboo subject, and the concept is becoming less tangible," he said. "Kids see parents punch in numbers at an ATM and watch as it spits out money."