If you have a teenager who is about to graduate high school, congratulations! It’s a huge milestone for both of you. And whether they are planning to head off to college or go straight into the working world, there are several financial topics you’ll want to address with them first. Let’s take a look at the money conversations to have with high school graduates.

The Importance of Saving

If your teen isn’t already in the habit of saving a portion of the money they earn or receive as gifts, now is the time for them to start. Talk about the importance of setting aside money for emergencies, as well as starting to save money toward future milestones, such as purchasing a vehicle or moving into their own apartment. Those big moments can seem far away to them at this point, but explain that life happens quickly, and they will be facing those financial decisions sooner than they realize.

The Danger of Easy Credit

College campuses are often the first place teens are exposed to the ease of applying for a credit card. And since they often have clean credit, many are approved on the spot. This easy access to credit can quickly spiral into the beginnings of unmanageable debt.

Before this happens, talk with your teen about how a credit card might feel like easy money, but is really a loan they must pay back — often at very high interest rates. Rather than letting them loose with a credit card, add your teen as an authorized user on one of your accounts. Or start them off with a secured credit card with a low limit. Either one is a lower risk way to introduce your son or daughter to responsible credit use. Check out these other ways young adults can establish good credit.

How to Recognize Predatory Lending

While you may recognize payday loans or car title loans as predatory lending, an inexperienced consumer of financial services might not. At first glance, they seem like a harmless and convenient way to make up for a cash shortfall. But explain to your teen the fees, exorbitant interest rates and revolving spiral of debt these types of loans can cause, and advise them to never get caught up in that cycle.

Avoiding Financial FOMO

Whether starting college or entering the working world, your son or daughter is about to meet many new people from all walks of life. As they expand their social circle, financial FOMO (or fear of missing out) is almost inevitable. If your teen expresses jealousy or the desire to have what others have, talk to them about focusing on their own goals and what’s important to them. Explain how it will always seem someone else has something more, bigger or better, but constantly trying to match other people’s lifestyles is a quick path to frustration, not to mention a lifetime of debt.

Pitfalls of Borrowing and Lending Money

Borrowing (or lending) $20 here or there might not seem like a big deal, but it can become one quickly when one party neglects to pay it back. Explain to your graduating teen how borrowing or lending money among family and friends can create resentment and damage relationships. If your son or daughter does choose to lend someone money, let them know they have to be OK with the possibility of their friend not paying it back. Also let your teen know there are other ways to help someone who is struggling financially that may be even more helpful than lending money.