One of the most valuable lessons a child or teenager can receive is instruction on how to handle their finances – not just for today, but for decades to come. The key to making smart financial decisions stems from knowledge and experience, and many young adults lack both.

Educating our youth in financial literacy is a key challenge for parents, teachers, and the education system in general. Despite its importance in a teen’s future, financial literacy doesn’t get the attention it deserves. As teens prepare for college, many of them haven’t learned the necessary financial basics. Why is that?

There Is a Vacuum in Financial Literacy Education

While awareness has increased recently, financial literacy is still an underserved education topic in middle schools, high schools, and even at home.

To put it in perspective, the United States ranked 7 out of 15 countries who participated in an international financial literacy test for high school students. The Treasury Department claimed less than a third of adults were ever offered a financial literacy course through high school and college. A 2012-13 financial literacy exam revealed that young adults scored an average 58% with only about a quarter of participants scoring over a 70%.

Furthermore, some studies show that parents neglect to talk about money matters such as paying bills, saving money, budgeting, and more with their kids. One report showed that 69% of parents were reluctant to discuss money with their children. The same report indicated that only 23% of kids reported talking to their parents about money often.

Why Is It Such a Big Deal?

Experience is the best teacher, right? It normally would be if the consequences weren’t so severe and far-reaching. When a teenager turns 18, the world opens to them, and so does the potential for disastrous financial decisions.

New environments, such as a college dorm or their first apartment, can lead to poor choices when they aren’t educated about money matters. They may apply for credit cards and use them irresponsibly. Not to mention, many young adults take out student loans without much thought to paying them later. Many neglect to build a savings account.

According to the Financial Educators Council, 39% of adults don’t have any non-retirement savings. 56% of adults don’t have a budget, and tellingly, 76% of college students wanted more help preparing for their financial futures. At the same time,

Some of those early money mistakes could be avoided if teens knew more about financial matters when they began their adult life. A few bad mistakes could lead to bad credit or a huge amount of debt that could take them years to clean up.

Get It Right Early On

It pays to get it right the first time. The earlier referenced Treasure Department report also claimed that adults who were offered financial education also had greater net worth, higher rates of saving, and larger regular retirement account contributions.

Financial literacy education doesn’t need to be complicated, and covering the basics is a good place to start. Here are just a few general habits to discuss.

Proper Credit Building Habits

Teens should learn the basics of credit cards, credit score, and credit building. They should understand how a credit card works and why you need to spend with it. They should know how to pay off a credit card balance and what happens when missing a payment. And they need to know how interest rates increase their expenses. All these lessons can be applied to other forms of debt.

Furthermore, understanding how debt levels, regular payments, and missed payments impact their credit score. On top of that, explain what a credit score means and how it impacts decisions for the future.

Basic Budgeting and Savings Skills

Knowing what a credit score is important, but it’s equally important to build finance management skills in general. These skills include learning how to cut expenses, saving money to pay bills on time, and how to manage multiple obligations. It can give your child the motivation to stay within their budget because they’ll know that overspending can lead them into serious debt over time.

Learning how to save money goes together with budgeting. This starts with opening a bank account and devoting a percentage of a paycheck or allowance to it. Learning about the importance of saving money is also a stepping block to understanding retirement accounts, emergency savings, and more.

Building a Future of Knowledge

Unlike some subjects in college and high school, financial literacy education instills lifelong skills to be used throughout your career. A foundation of financial knowledge will help young adults avoid making costly, derailing mistakes and instead make constructive, proactive decisions for the future. A little education now could also be a springboard for further curiosity. It could inspire your child to keep self-educating themselves about finances in the years to come.

Andrew is a Content Associate for LendEDU – a website that helps consumers, college graduates, high school students, small business owners, and more with their finances.