What your college freshman should know about money

The National Foundation for Credit Counseling's 2014 Financial Literacy Survey suggests that many American adults know little about the basics of personal finance. If you're a parent of an incoming college freshmen -- an adult who is likely just beginning his or her financial journey -- these findings should worry you.

"Parents put a lot of time and money into preparing their child to leave home, but often neglect the basic life skills associated with personal finance," says Gail Cunningham, spokesperson for the NFCC.

Because financial education is often lacking in schools, it's typically up to parents to teach soon-to-be freshmen how to manage their finances. They need to teach them how to track their purchases, practice responsible debt habits and create a budget that keeps them from spending their monthly meal money in just three days.

"It can be a free-for-all for kids just starting college," says Kimberly Foss, founder and president of Roseville, California.-based Empyrion Wealth Management. "It's like sending a kid into a candy store with unlimited funds."

Sobering numbers

The NFCC survey found that most adults say they learned their personal finance habits from their parents. Unfortunately, parents are not always the best teachers. More than four in 10 respondents to the survey gave themselves a grade of either C, D or F for their mastery of personal finance.

Cunningham says it should not be surprising then that so many young people enter their freshmen year of college with little knowledge of how to manage their money.

There is good news though: Parents can help by giving their incoming college freshmen a crash course on smart financial behavior.

Foss says that the most important step parents can take is to teach their future college students how to create a simple budget. Freshmen can then learn how to track the money they have coming in each month against the money they are spending on pizza, movies, food plans and other expenses. Parents should check in with their sons and daughters once a month to track how closely their children are sticking to the budget.