Next to sex, what’s the most awkward topic to broach with you kids? Why, it’s money, of course. As with the birds and the bees, the financial facts of life aren’t an easy discussion for most parents to have with their young children.

But if you don’t teach your kids the financial basics during their formative years, you’ll regret it later—especially if they have trouble making a go of life and end up “boomeranging” as adults to come back and live in your basement.

They need to learn that it’s never too early to start building wealth. Indeed, their youth gives them enormous leverage, but only if they use it.

Here’s how to teach your kids the practical money skills they can draw on for a lifetime. Consider it a gift that only a parent can give.

• Open a checking account in your child’s name.

Unfortunately, most banks won’t allow a minor to set up a checking account. However, a few banks do allow a kid to be a signer on an account as long as a parent is a co-signer.

Federal laws prevent banks from pursuing minors for bounced checks, so they’re going to require that the parent ultimately assumes responsibility. Call around to find a bank in your area that offers an arrangement like this.

The most important lesson of the checking account is learning to balance income and expenses. This is a perfect way for your child to demonstrate living within her means, being responsible for her bills, and setting financial priorities. Encourage her to show you that she’s mature enough to make some of her own financial decisions.

This is also the perfect time to show her the magic of online banking. Some banks will even text message account info to her smartphone—how cool!

And don’t forget to explain that just because there are still checks in her checkbook, there isn’t necessarily money in the account. (From time to time, I must explain this to my wife.)

• Buy stock in a company your child knows and loves.

Most people learn by doing. In this case, buying a few shares in a well-known company can open the door to an exciting new world. Your kids should learn that the best way to build net worth over the long haul is through stocks.

Hand over the reins and let your child handle the details of stock ownership. Help her find companies that make products she’s familiar with, such as video games, toys, comic books, movies, action figures, bicycles, restaurants—whatever strikes her fancy.

If the concept takes hold, demonstrate how to dig up and interpret information found on web sites, in newspapers and in financial statements. Investigating a company together can be like a treasure hunt or the plot of a mystery novel.

Review some key concepts like profits and debt. But don’t make it too heavy. Remember that this is about sparking an interest, not running a hedge fund.

• Stoke the fires of sibling rivalry.

Nothing drums up interest like some friendly competition.

Ask everyone in the family to create their own individual model portfolio. Set a start and end date for the competition. Summer vacation seems like the perfect amount of time.

Set basic ground rules to help highlight important investing lessons like diversification (one company can’t make up the majority of a portfolio). Once the particulars have been settled, start the virtual buying and selling!

Most importantly, don’t forget to offer a prize to the winner. Maybe some real cash to invest in a real portfolio.

• Teach your teens the cold hard facts about buying a used car.

A car is one of the most expensive items that anyone buys, regardless of age. As your teen approaches that magical time when it’s finally legal for him to get in the driver’s seat, first teach him the pricey truth about owning a set of wheels.

I’ve heard many adults refer to a car as an “asset.” If you insist on doing so, at least refer to it as a “depreciating asset.”

Impress upon your child that a car loses value over time, no matter how impressive the paint job or the rims. If he knows that for every $1.00 he pours into this precious vehicle, he’ll be lucky to get $0.70 back when he goes to sell it, he may decide he wants to look for a better use for all that pizza-delivery money.

Unless you’re going to help foot the bill, your teen will probably only be able to afford a used car. Before you hit the car lots, steer him toward the multitude of used car-buying guides available for free on the Internet. If he does most of the research, he’ll have a better idea of the all-important concept of “value.”

Don’t forget to walk him through the other expenses involved with owning a vehicle, namely, gas and insurance costs, even if he won’t be responsible for paying them.

Editor’s Note: If you have a family, you contend with grown-up financial needs. To generate high but safe income, regardless of today’s uncertain market conditions, consider the advice of my colleague Robert Rapier.

Robert Rapier is the chief investment strategist of Utility Forecaster, Income Forecaster, and Rapier’s Income Accelerator.

Robert is one of the world’s foremost experts on utilities and income investing, but his deep knowledge also extends into other profitable segments.

Want to learn more about Robert’s next trades? Click here.

John Persinos is the editorial director of Investing Daily.

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