• Graduate from college. Even if your children are interested in pursuing careers that don’t require a college education, encourage them to obtain a college degree first. It is much easier to go to college straight out of high school, before getting married or taking on other responsibilities. And financially, college graduates on average have higher earnings than nongraduates. For instance, the median earnings by level of education for 2003 were $21,600 for someone without a high school degree, $30,300 for someone with a high school degree, $35,700 for someone with some college, $37,600 for someone with an associate degree, $49,900 for someone with a bachelor’s degree, $59,500 for someone with a master’s degree, $79,400 for someone with a doctoral degree, and $95,700 for someone with a professional degree (Source: Trends in Higher Education Series 2005, October 18, 2005).

• Develop written financial goals. Developing written financial goals will help your children think about their future and how to achieve their goals. As part of the process, encourage your children to get a money management system in place to track expenditures and organize information about assets and investments. Establishing these good habits at a young age will help ensure your children achieve their financial goals.

• Live well within their means. As your children start lives of their own, help them make some fundamental decisions about how to live. Make sure they realize that the only way to save for future goals is not to spend all their current income. So, before your children decide where to live or what kind of car to drive, help them prepare a budget to see how much they can really afford for those items and still have money left over for saving.

• Utilize all retirement vehicles available. As soon as your children are eligible, they should start contributing to a 401(k) plan at work. If their employer doesn’t offer a 401(k) plan, teach your children the benefits of Individual Retirement Accounts (IRAs), both traditional deductible and Roth. The importance of saving for retirement at a young age can’t be stressed enough. If you’re having difficulty accumulating funds for retirement, imagine how much more difficult it will be for your children, with the prospect of even longer life expectancies and less help from employers and the government.

• Use debt sparingly. If your children get into too much debt early in life, they can spend the rest of their lives struggling to get out of debt. Large payments for principal and interest can seriously reduce the funds available to save for other financial goals. Stress to your children that it is best to only use credit cards if they can pay the balance in full every month. Other debt, like car loans and mortgages, should only be taken on after a careful analysis of whether your children can afford the payments and whether the purchase fits in with their financial goals.