Sometimes I fear that, on both sides of the Atlantic, we are raising a generation that doesn’t know how to fend for themselves financially. Personal finance is a fairly complex area, and for the moment, “money lessons” do not form part of the standard curriculum. Hopefully, these 4 money lessons to learn before leaving school will help you avoid some of the common mistakes young people make after leaving school.

In the UK, the Insolvency Service has reported that 25% of consumers granted debt relief orders (DROs) are aged 25-34. To qualify for a DRO, a consumer must have less than £50 in disposable income per month and assets of less than £300. While in the US, the largest banks in the United States collected more than $32 billion in NSF (overdraft) fees in 2012 alone. Delve further into that statistic and you find that a huge portion of that money came from accounts owned by people under the age of 35. The only way to avoid a continued tailspin into financial anarchy is to educate the young masses, both at home and in school. Along those lines, here are a few money lessons that everyone should know before they graduate from high school.

1) Respect the cheque

Under current legislation in the UK, a bank has the right to physically see a cheque before releasing payment. However, that is about to change with electronic cheque clearing, the system currently in place in the US, France, China, and India. Historically, it has taken six days for a check to clear, giving a person time to make sure they have sufficient funds in their account. This will no longer be the case. The safest way to view a check is that it is someone else’s money the instant that you have written it–those funds are no longer available to you. Failing to learn this way of thinking could have devastating results like we’ve seen in the US. After all, the BBC has reported that some UK banks charge more than payday loan lenders on overdrafts, with annual percentage rates reaching…800,000%. For advice on dealing with payday loans, overdrafts and other alternatives, check out our “alternatives to payday loans” article.

2) Live below your means

This is basic mantra among personal finance writers. Many adults will spew it forth when asked. It is also the least understand aspect of finance I have encountered. Living below your means does not equate to buying a new Ford when you can “afford” a Mercedes. It doesn’t mean that you can afford a mortgage payment of £750 and having one that is only £725. It means owning a used car when a new one is easily affordable. It means saving ten percent of your income, or more, each pay period. It also means sticking to your own thoughts and ignoring everyone else’s opinion that you can afford “more.” When you want to buy a car, the salesperson does not ask you what you want to spend on the total purchase, they ask how much you can afford per month, then they will do their best to convince that you can afford a slightly higher payment. It is the same with a home, electronics, even your cable bill.

3) Do Not Chase The Material

All of us have come across a time when we have been envious of the material items that someone else owns. Even the most frugal person runs into it occasionally. For me it was when a friend of mine purchased a 70 inch television and surround sound system. I really enjoyed watching football at his house and thought “I make more than he does, I can afford one of these at home.” Of course, he went into debt to buy his and I didn’t want to do that, so the feeling faded quickly. Many people allow that feeling to take over and they buy and buy and buy again. I have seen many foreclosures and repossessions take place because of materialism.

4) Set Realistic and Clear Goals

Setting financial goals is essential to financial stability. Often money related goals are much too broad. We set goals like buying a house, when the that goal should have multiple goals within it. It should start with “when do I want to buy,” then go to “how much do I need to save every week to buy in that time frame,” next internal goal should be “meet the savings goal,” ultimately ending with buying the home. The same process should go into buying a car, television, just about anything that costs more than £50.

So, how do we win younger generations over to this way of thinking? Simple, start talking to your children when they are small. As soon as they can understand that bubblegum isn’t free, start giving them small lessons on financial principals, the need to save, and how to live debt free. It wouldn’t hurt if schools had mandatory curriculum in place to help reinforce what is taught at home–in fact, 88% of UK adults surveyed said they thought financial education should be taught in schools. But, as we can’t count on these money lessons being taught in school, the education has to start at home.

This article was co-written by Taylor B. and Jerry C. of Repaid.org.