When God created Adam (mankind's first parent), God formed him from the dust of the ground (gave him a physical body) and breathed into his nostrils the breath of life (Adam's soul and spirit). At that time he became a living being. (Genesis 2:7) 

Just as our material side (the body) is passed down from generation to generation (through procreation), the same is true of our immaterial side (the soul and spirit); we inherit our body, soul and spirit from our parents.

In all fairness there are several theories as to where our immaterial part (the soul and spirit) comes from. Only the Traducian theory, however (which states that we receive our body, soul and spirit from our parents) accounts for the fact that all of us (with the exception of Christ Jesus) are sinners.

If our soul and spirit were created by God at the time of conception, or birth, as some believe, then surely all humans (with the exception of Christ Jesus) would not have a sinful nature as we do; we would not be born in sin as the Bible says we are (Psalm 51:5) and in need of a Savior (Romans 3:23, 5:12-21, 6:23).

Mankind's sinful nature can be traced all the way back to our first parents Adam and Eve. (Genesis 2:15-17, 3:1-24; Romans 5:12-21)