Millions of parents are getting ready to send their babies off to college. But before they fly the coop, there is one more important thing to teach them- money management!

Unfortunately, money management is not typically subject kids are taught in school, so many teenagers are lacking those skills. The NFEC (National Financial Educators Council) gave a financial literacy test to 15-18-year-olds nationwide. The average score was just 60%- in case you forgot, that is a D! This doesn’t bode well, considering the financial decisions people make in college can be with them for years to come. We need to make sure they are starting off on the right financial foot.

I think there are 4 important areas to be educated on:

1. Budgeting

A budget is the backbone of a solid financial plan, and learning the skill of keeping a budget will serve college students throughout their lives. In one column, keep track of your income and any money coming in. On the other side, list your expenses. Those are both set expenses like rent, and variable expenses like food, entertainment, and gas. A budget worksheet is a great place to start.

2. Checking & Savings Accounts

If you don’t have a checking and savings account, consider this your homework before you head off to college. A savings account will put you on the right path for the future, even if you can only put a couple dollars away here or there. A checking account is important for buying things and paying bills without having to carry around a lot of cash. But remember to keep track of how much money you have in your account so you don’t get hit with fees for bouncing a check or over-drafting.

3. Credit Cards

Credit cards are an exciting step toward true financial independence, but they can cause major problems if you are not careful. When you’re choosing that first credit card, don’t just pick the company that offers a free t-shirt. You should be studying the fine print before you sign up- look for a low-interest rate (APR), an extended grace period, low penalty fees and a card with no annual fee. Once you get that card, it’s tempting to go on a spending spree, but you should never buy more than you can pay back right away. Also, keep track of the payment date so you don’t get hit with a late penalty. Missing a payment can also drag down your credit score.

4. Student Loans

You do not have to make payments until after graduation (and usually, you have a grace period after graduation day), but starting to pay off your student loans while you’re still in school will help you in the long-run. Even if you don’t make full payments, consider paying off the interest that accrues while you’re in school. Besides saving money, this will help establish a relationship with your student loan provider. It also sets a good tone, so you can really tackle those student loans once you graduate.

Grads need to already be thinking about retirement as soon as they start their careers!

Retirement may not be top of mind, but I tell my clients and their kids they should start planning for their last day of work on their first day of work. Young people have the benefit of time on their hands – so their money can grow. I recommend they take advantage of any employer-sponsored retirement plans, like a 401(k) as soon as they’re eligible. Contribute at least enough to qualify for the full amount of the employer match – that’s free money!