Once again your college student returns home for the holidays. You've already prepared for the usual stuff: the laundry overload, the last minute raid on your cupboards, and the wall of vague replies to your simple question, "So, how's college?" What you might not be prepared for, but very well should be, is a discussion about getting your college student's financial life started.

Talk about Big Brother

Tell your college student about the Big Brother of the financial world - the credit report. Six months after being approved for a first credit card, your college student will have a credit report which tracks how much is borrowed and how well it is paid back. Your college student will be given a FICO score, which quantifies the contents of the credit report. People with high FICO scores have an easier time borrowing money, renting apartments - even getting a job. Tell your student the obvious: pay the credit card bill on time and only have a total of one or two credit cards. Starting young adulthood with credit card debt is starting in the wrong place. Say that early and often. There's a good chance your student already has at least one, and probably seven, credit cards.

Gaining credit is a double-edged sword if it is not handled properly. Keeping the FICO score high will make your child's post-college life easier. A low FICO score is a bit like having a low SAT score - no one will really want to give your college student the time of day, financially speaking.

Talk about compound interest

My Website, gettingloaded.net, offers a compound interest calculator. Sit your child down during the holiday break and take a look at a compound interest calculator. Drop in some numbers and figure out how much your child will have for retirement by saving a set amount at a set interest rate. Be realistic. Keep the sample interest rates under 12 percent. Start by showing how much $1 invested at 10 percent interest will accumulate in 40 years. With this example, a college student should be able to grasp how much they'll lose to retirement with every dollar spent on coffee, cigarettes or beer.

Talk about the Roth IRA

This is, arguably, the greatest gift young people have received from the IRS in the last ten years. The Roth IRA is an account that allows you to shelter investments from taxes - forever. At retirement, a person with a Roth IRA savings will have approximately twice as much as someone who did not shelter earnings this way. The real key to the Roth IRA is not talking about it, but convincing your 19-year-old to put some of his or her hard-earned income into it now.

Talk about yourself

There is one universal response I hear from successful savers when I ask them, "What do you wish you did differently?" They always reply, "I wish I started earlier." I'll bet that no matter how successful you are, you would say the same thing. Take a moment and talk with your children about some of your own financial triumphs and fiascos. Even if your nearly-grown kid dumps laundry on you, raids your cupboard, and won't answer your questions, you are still an inspiration in his or her life. Years from now, when your son or daughter has a portfolio in the seven figures, you'll be thanked. I promise.

Peter Bielagus, a licensed financial advisor, is the author of Getting Loaded: A Complete Personal Finance Guide For Students and Young Professionals and the interactive CD Rom, Mastering Your Personal Finances. He's a member of the Adopt An Author Program and he can be reached at www.gettingloaded.net

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