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Parents, give yourselves a pat on the back. You've raised your child all the way through to graduation, and they're ready to take on the world (or so they think).

This is your window of opportunity. Opening a money dialogue with your graduate is one of the best and longest-lasting graduation gifts you can give. After all, while money doesn't solve all problems, it certainly is the root of many of them.

Talking about financial planning for the college graduate doesn't have to be intimidating. Below are a few key points to touch on, as well as steps on how to take action.

Talking Point #1: How to Remain Independent

Most young adults (and lots of older adults) think that when something costly happens, it's bad luck.

Actually, it's just life. Unplanned costs occur so consistently that your child needs to learn to plan for them. Financial planning for the college graduate starts with letting them know that a portion of their paycheck should be set aside for an emergency fund.

Otherwise, they're one emergency away from ending up back on your couch.

Action Steps to Take: The first step is for your grad to open a separate savings account just for an emergency fund. They can then set up an automatic withdrawal into this account from their paycheck or checking account. Ultimately, they'll want the account balance to equal six months' worth of living expenses.

Talking Point #2: How to Get Your Debts in Order

For many graduates, along with a shiny new diploma comes student loans. Some may even have credit card debt.

Financial planning for college graduates must include a talk about strategies to efficiently pay debt off. Paying off debt will eventually open up monthly cash flow that can be used for the next steps in their lives, like purchasing a home or paying for a wedding.

Action Steps to Take: Have your child update their address with each of their student loan lenders and any other creditors so that they won't miss any important mail, including notification when their student loan grace period is up. Discuss debt pay-off strategies, including the avalanche method. In the avalanche method, your graduate focuses on paying off their highest-interest debt first. This way, they can reduce debt more quickly and pay less interest overall.

Talking Point #3: How to Earn More Than Your Salary

Your child needs to understand that if their company offers benefits, it would be wise to take advantage of them. These benefits may include matched 401(k) contributions and health care plans where the employer pays part of the premium, among others.

Not taking advantage of these is like leaving free money on the table. Who wants to do that?

Action Steps to Take: Once your child gets their first post-grad job, help them go over their benefits paperwork. If their company offers 401(k) matching, urge them to max this option out. If the company 401(k) doesn't come with matching, discuss how they'll need to do some research to figure out if the 401(k), an IRA, or a split between the two would be best.

Your grad may have access to other perks like wellness spending accounts, FSAs and commuter benefits. Help your graduate evaluate these perks and discuss the best ways to leverage each one.

Have these three money conversations with your college grad, and you can sleep well knowing you've helped them start off their adult life on the right financial footing.

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

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