If you’re the parent of a teenager (or any child you want to understand money matters), you probably know that you should teach them about money matters. But knowing you should discuss money and knowing what specific issues to hit are two different things.

Here’s a look at some suggestions of what topics to be sure you address when talking finance with your offspring.

• Debit vs. credit: If your child is interested in getting a credit card for the convenience factor (particularly if she likes shopping online), let her know that a debit card would serve her needs. The difference is that a debit card deducts money from a checking account, while a credit card is essentially a loan you must pay back at a later date – with interest!
• Get a job: In fact, when the Credit CARD Act of 2009 takes effect this month, those under 21 must prove that they have a job (and/or get a parent’s or guardian’s signature) in order to qualify for a card. Plus, having a job will mean your child has a way to pay for purchases he wants to make.
• Remove temptation: Call 1-888-5-OPTOUT, which allows you to eliminate your name from mailing lists for “free” credit card offers. The “out of sight, out of mind” rule may be the best defense against aggressive vendors.
• Limit yourself: Suggest your child to limit herself to two cards total – and, if she chooses to open a credit card account, make sure she understands the importance of paying her balance in full each month.
• Stay informed: Show your child how to check his credit report by visiting www.annualcreditreport.com, and encourage him to check it annually and review it for errors.

Unveil the Beast

Credit cards can be scary, but usually only after they’ve gotten you into serious debt. Help your child avoid getting there by explaining all the fees and costs associated with having a credit card.

• Annual fee: Yearly cost of holding a card
• Finance charge: Also known as the “interest rate,” it’s assessed on any part of your bill you don’t pay in a given month
• Late payment fee: Charged when you fall behind and could be accompanied by an increase to the interest rate
• Over limit fee: Charged every time you make a transaction that sends you over your limit for that card
• Cash advance fee: Really, the interest charged to take out this kind of loan

Helping young adults learn the ins and outs of credit and money can help prepare them for fiscal temptations, and can mean the difference between a comfortable adulthood and bankruptcy.

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