Covering college costs today often requires a lot of student loans, but they can be viewed as an investment in a better future.

Not so with another form of student finances: reckless personal spending.

A recent survey of 340 financial advisers commissioned by First Command Financial Services in Fort Worth, Texas, found that many college students engage in bad financial habits.

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The advisers reported that a large percentage of college students do not have a budget, charge too much on credit cards and carry high levels of debt.

“Sadly, many of today’s college students do not have an adequate working knowledge of basic personal finance,” says Terri Kallsen, a Certified Financial Planner and executive vice president of strategic development at First Command Financial Services.

New legislation aims to rein in credit card companies’ exploitation of students, which some critics liken to a form of financial hazing. And financial institutions and nonprofit organizations are working to educate students in financial literacy.

But the best way to make sure a child stays out of trouble is for Mom and Dad to sit down and explain the financial facts of life.

“Parents can and should play a significant and ongoing role in educating their college-bound children about the importance of controlling spending and debt today as part of a lifetime commitment to sound financial behaviors,” Kallsen says.

Following are five important topics parents should cover before shipping junior off to school.

1. Help your child build a budget. Long before students register for freshman comp, parents should hold a class in Budgeting 101.

“The student must fully understand the importance of monitoring cash flow and the limits of their budget, and how long it really takes to pay off excessive debt,” says Jim Van Meter, an independent financial adviser, Certified College Planning Specialist and owner of Tahoe Financial Planning in Reno, Nev. “This could be challenging, because many parents do not deliberately do this themselves.”

Sit down and help your child develop a realistic budget by identifying necessary expenses, such as textbooks, housing and food.

“This type of meaningful discussion can help students keep spending under control and avoid amassing consumer debt,” Kallsen says.

2. Clearly establish financial expectations. Before your child rushes off, clearly pledge how much support you will provide for the next four years, Kallsen says.

“Tell them what you plan to provide, then stick to that plan,” she says. “Do not bail them out of debt or pay for their purchases beyond the expectations you have set.”

However, parents should be available for advice and emergency assistance, Van Meter says.

“Stay in communication with the student to monitor money use, and make it easy and rewarding for them to ask for help quickly if they get in trouble,” he says.

3. Highlight the consequences of poor choices. “Young people tend to be shielded from harsh financial consequences at home, and are often complacent and naive,” Van Meter says. “Start by pointing out actual examples of consequences of poor financial choices, to motivate the child to listen and follow sound advice.”

Young people need to know that a binge of high debt and a low credit score could produce a financial hangover. It could crimp their ability to get hired for a coveted job, buy a car or rent an apartment.

“A desire to avoid pain can be the most powerful motivator to listen,” Van Meter says.

4. Suggest online tools for tracking finances. One of the best steps college students can take is to keep a close watch on their bank balances, says Kevin Walker, co-founder and CEO of SimpleTuition.com, which provides college loan comparisons and financial advice to the collegiate crowd.

“Encourage them to sign up for a free financial management tool,” Walker says. “There are several online such as Mint.com, and some are designed for today’s 20-somethings.”

5. Underscore the rewards of financial responsibility. Parents need to help their children understand that the world of relative privilege in which they grew up “has mostly disappeared,” Van Meter says.

“Much of the relative prosperity over the past 30 years was fueled by a desire for immediate gratification, the availability and misuse of credit, and failure to live within the limits of cash flow and a budget,” Van Meter says. “Many people now find themselves in deep trouble.”

Share examples of people who graduated to prosperity by making disciplined financial choices.

“There are also many people who have a secure retirement, own their homes outright, and are looking forward to a happy and independent life in their later years,” he says.

The clear lesson for freshmen: “The consequences of their choices will be theirs to own,” Van Meter says.

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