Give Your Grad the Gift of Financial Education
Graduation is almost here. Your grad is probably ready to head off on their next adventure. But before they go, give them a gift that will last. Here are four essential financial concepts you should teach your graduate before they go off to college or join the workforce:
How checking accounts work and why they’re important
Every graduate, no matter where they are headed, needs a checking account. If you haven’t helped your graduate set one up already, now is the time to do so. Help them navigate the terms, conditions and fees and pick an account that fits their needs.
Make sure they know the basics, like making deposits and withdrawals, using a debit card and writing a check. You should also stress the importance of reviewing their monthly statements and balancing their checkbook.
Why it’s important to budget – even when it’s not fun
Budgeting may not always be popular, but it’s necessary - especially for students with limited income. Explain how to balance their income and expenses, and help them understand that they should never spend more than they have coming in. Even if you’re planning to help pay their bills, they still should know what things cost and where that money is coming from. Help them create a budget. Make it fun by creating one yourself and competing to see how you both do following it.
How to use credit cards and why
Talk honestly with your child about credit cards and your experiences with them. Explain how they work, what interest rates are and how they can avoid paying interest by paying their bill each month. If your graduate decides a credit card is a good option, encourage them to use their card only for emergency expenses that they don’t have the cash to cover. Help them understand the role that credit card and other debt will have on their future.
How to create a savings plan that they can stick to
Your grad might feel like it’s impossible to save while in college, but reassure them that even saving a little from every paycheck adds up. If they don’t have a dedicated savings account, help them set one up when they open a checking account. Keeping their savings in a separate account can be helpful since it isn’t connected directly to the money they are using for bills and everyday purchases.
As a parent, you want your child to get off on the right start. Give them the information and confidence they need to help them navigate the financial world. The more they know, the better they’ll be in the long run.