We can shake our heads all we want, but we shouldn't be surprised at the state of financial affairs of the young. Practical money management skills simply aren't taught in most schools. In fact, a JumpStart Coalition Survey found that today's graduating seniors know less about finances than their peers did just five years ago.

As far as I can tell, kids these days don't know how bad they have it. Debt levels and bankruptcy are at record highs. Jobs are going overseas, and the government might not be able to foot the future generation's retirement tab.

Recent studies show that less than 20% of workers age 21 to 24 choose to sock away even one dime in their work retirement plan when handed the paperwork. In the meantime, the average college graduate saunters past the dean's podium with $3,000 in credit card debt trailing behind. And here's the real kicker: The under-25 crowd has the fastest-growing rate of bankruptcy in the country.

Young adults (and even some not-so-sprightly ones) simply don't know enough to say "no" when lenders offer them access to plastic money and marketers of everything from computers to couches say "buy now, pay later!"

Are you sure your child could resist?

Time for "The Talk"
What's a parent to do? Talk about it, that's what. Parenthood offers plenty of opportunities for uncomfortable confrontations. Don't let money be one of them.

Vow to prepare your teen for the money realities of the real world while they are still living under your roof and rules. Because if you don't do it, then who will?

Here's the example the rest of the country is giving: At the end of last year, U.S. households had $10.4 trillion in outstanding debt, and one out of every 73 filed for bankruptcy. The Commerce Department reports that our personal savings rate is a wafer-thin 1.8%. As a nation, we're borrowing money at a record clip to pay for a lifestyle well beyond our means.

You've already begun the at-home money tutelage whether you know it or not. It started when you began doling out an allowance. Even before that, you and your wide-eyed child probably had a few spats in the aisles of Toys "R" Us when a strong case of "the wants" (answered by a firm "no") was followed by a tantrum.

But now your little lovely is nearing the age of consent in the eyes of the lending world. That means she can go ahead and sign on the dotted line when the credit card offers come along. The temptations won't stop there -- in addition to easy credit, she'll be enticed to get a cell phone, a new car loan, and sign up for a furniture/stereo/computer payment plan for her dorm or first apartment.

Teach your child a different way of life.

"Pay for your own piercings!"
How should you start? Expose your little lovelies to the realities of family finances -- show them what it costs to put a roof over their heads and junk food in their packed lunches.

By the age of 13, it's probably safe to open up your checkbook and let your child in (with the caveat that this is information that stays in the family). Show them why you aren't buying a new car this year or are putting off a vacation because of larger-than-expected medical bills. Obviously, you don't want to burden your child with money worries. Just be matter-of-fact and share what you think they can handle.

After "the talk," it's time for some action. Some parents have their kids sit with them when they pay bills. Others have their child do the paperwork as one of their chores. How you dole out the information depends on your comfort level and your kid's maturity.

It's tough to encourage your kid to save when mass media incessantly urges them not to. Try regaling your teen with this example: A child who is able to sock away $1,000 a year in an index mutual fund from age 15 to 30 will have more than $1 million by the time he's ready to retire.

Still nonplussed? Take a cue from your 401(k) and offer to match (30 cents, 50 cents, a dollar) every dollar your child saves. Let them save for a short-term treat, but offer to match even more money if they invest their money for the long term. Heck, turn it into a competition between your kids. They're always bickering anyways.

Got a teen who's whining for a cell phone of her own? Does your son regularly ply you for extra spending cash? Go ahead and give in. You set a curfew for weekends. Now you can do the same with money and minutes. Prepaid credit cards and cell phones give children hand's-on practice under limits set by parents. (I wrote about some new tools at parents' disposal in Your $600 Cell Phone Bill.)

What should a parent do when the credit card or cell phone runs dry? Give them a little leeway those first few months. After all, it takes some folks a lifetime to learn to live within a budget. After that, tell them they'll have to bail themselves out of a pinch. (Welcome to the real world!)

"When I was your age.... "
Many parents I've met fear they are ill-equipped to teach their kids fiscal responsibility, citing a spotty financial history that sets a bad example. To that, I say, "So what?"

What do you think your teenager wants to hear more about -- mom's pristine credit record or about the time she put a spur-of-the-moment college cross-country road trip on plastic and took 10 years (and thousands in interest) to pay off? Go ahead and regale your teen with stories about your biggest money blunders and how you recovered -- or are still paying the price. I guarantee you'll get your kid's attention. (Feel free to embellish, too. I won't tell.)

If it's true that kids pick up the habits of their elders -- and based on my own propensity for rambling voice mail messages and ultra-sweet coffee drowned in skim milk, I'm sure it's true -- then take this opportunity to clean up your own money act. Decide to pay your bills on time, keep your credit record clean, and live within your family's means.

All of these are lessons that it's never too early -- or too late -- to learn.

Additional resources for parents and their offspring:

Dayana Yochim still has "money talks" with her parents. Only now it is she who doles out the advice. You can view her investments and profile, and read all about The Motley Fool's disclosure policy.