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As families prepare to send their kids off to college or to start their first jobs, it's time to foster the next phase of their financial growth. Start by having an honest conversation about what you're willing to contribute financially.

Many parents help their young adult children, often at the expense of their own retirement plans, so it's critical that you have a clear idea of what you can afford.

Communicate which expenses are covered by family funds (textbooks, meal plans) and which are the kids' responsibility (entertainment, dining out). If your child is working and not attending college, discuss when your support, which includes having them live with you rent-free, will conclude. If you do not create time-bound goals, you may find yourself paying for adult children's expenses for decades.

With these boundaries established, encourage them to track income and expenses. Include all money sources: full and part-time work, work-study programs, summer employment, and family contributions. The method isn't important (app or spreadsheet), but forming the habit is critical.

Now is also the time to establish a relationship with a financial institution. Many parents prefer keeping students at their existing bank to maintain oversight and enable easy transfers. That’s fine, but regardless of where the account is held, you need to explain compound interest, help them understand banking fees like minimum balance requirements and overdraft protection, and make sure that they become proficient with electronic bill-paying systems.

Another big step involves discussing credit and debit cards. While debit cards might seem safer, because they pull funds from an account, they don't build the credit history essential for future borrowing at favorable rates. The CARD Act of 2009 mandated that applicants under 21 must show adequate independent income from a job or scholarship to qualify for a card in their own name—they can't use parents' or partners' income on applications.

Instead of co-signing for your under-21 child who lacks sufficient income, consider a secured credit card or adding them as authorized users on your account. Both approaches help build credit history while maintaining oversight. Remember that as the primary account holder, you're responsible for all charges if students overspend.

The credit card conversation flows seamlessly into discussing credit reports, scores, and debt repayment. This is especially important for those students who will graduate with loan payments. While repayment may seem like a long way off, two or four years can fly by, so the earlier they realize those payments will have real life impact, the better.

Try to make the connection between financial decisions and life opportunities clear. Explain that bad credit scores don't just mean paying more interest—they may impact your young adult's ability to secure housing, transportation, and major purchases throughout their lives. Encourage them to access their free credit report at annualcreditreport.com to monitor their credit health.

Even with limited income, college students and new workforce entrants should establish automatic savings habits. Encourage them to save at least 10 percent of earnings into a savings account, though any amount is better than nothing.

For students with earned income from employment, opening a Roth IRA introduces retirement investing concepts early. The power of compound growth means even small contributions during college can grow substantially over decades. If your child starts a job with a retirement plan, urge them to participate at least up to the company match.

The goal isn't perfection but building systematic approaches to money management that adapt and grow with changing circumstances. Young adults who master these fundamentals create the foundation for achieving financial independence and greater opportunities throughout their lives.

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(Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com)

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