Now is the time that high school seniors take their college entrance exams and send out their application packages to the colleges of their choice.  In so many ways, these kids are on the brink of adulthood.  Yet, because very few high schools now have personal finance classes, many of these students are not ready to handle their own finances.  However, in just one short year, they’ll be in college and financially independent.

Before your child leaves the nest, make sure you cover the personal finance basics with him or her.

Have the Student Loan Chat

Many students see the price tag for college and then see the financial aid package.  If they get approved for enough loans, they think they’re okay and they can afford the particular college of their choice even though they’ll be buried in student loan debt.

Make sure that your child understands the repercussions or student loan debt completely.  Show her how much she will be paying over the life of the loan.  Let her know what her monthly payment will be and how much of that monthly payment will be interest alone.  Show her how much she will likely take home from her job and how much of her salary those loans will eat into.

Teach Him to Save for Retirement

The earlier your child can save for retirement, the better.  Again, give him hard numbers and show how much his money will grow the sooner he begins investing.  Even investing 10 years earlier can make a big difference in the amount of money he has for retirement.  In addition, show him some resources such as reading up on retirement on Suncorp’s website.

Teach Him to Live Like a Pauper in College

Sure, living in the best apartment on campus, hitting the bars and restaurants every night and taking great spring break trips are fun, but they’re also likely the activities that will land your child in deep credit card debt.  Teach her to live like a pauper in college so she can begin her career and her adult life unencumbered by debt repayments.

Just Say No to Debt

This point links in with point three.  The earlier you can teach your child the he can only afford what he can pay  cash for, the better.  If he can stay out of credit card debt as well as substantial student loan debt while in college, he’ll have greater freedom when he graduates.  If he wants to take a job for a year or two working for a non-profit or joining the Peace Corp, he’ll have a much smoother path if he doesn’t have debt weighing him down.

Ideally, your child has learned many of these lessons, but if not, don’t despair.  Many American teens haven’t yet learned these.  Just make sure to teach them to your child before she heads off to college, a place where she can make–or break–her financial future.

How do you help your children become ready to handle adult finances?