The typical college freshman is burdened enough by scholarly responsibilities, homesickness and self-doubt. To keep your freshman of tomorrow from suffering the additional angst brought by their first checking account, start them off sooner--by their junior year in high school. Initially, keep it simple, avoiding frills and extras like overdraft protection; they need to experience the reality of bounced checks to understand their record-keeping responsibilities.

Many college freshmen today have credit cards, and if your kid is to be one of them, then this, too, has a learning curve that is best experienced under your tutelage. Before your kids acquire their first credit cards, they need a lesson in the evils of plastic. Tell them that this is where most individuals' finances go seriously awry, and illustrate your point with interest tables that show the damage that 18 percent annual interest, compounded over the years, can do to their savings potential. Also, tell them that credit is a privilege, not a right, and that if they abuse it, they will lose their ability to get more.

After setting up rigid criteria for the use of a credit card, start them off with training wheels in the form of a secured card--in which the holder charges only up to a cash account kept with the issuer. This way, they become accustomed to using the card judiciously without getting in hock. If their purchases are sound enough, then move on to an ordinary credit card, encouraging them to pay the balance each month to avoid interest charges.

When your kids go out to make purchases on this card, they may be tempted by same-as-cash purchase offers, in which buyers of items like appliances are allowed to borrow interest-free as long as they pay off the balance within a set period (usually six months). Financial planners like Eleanor Blayney of McLean, Virginia, advise against using same-as-cash. "It disassociates the cost from the benefit," she says.

Next: Teen years: Investing