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How To Teach Your High School Graduate About Managing Money

By Mark Riddix

One of the best ways to create a fiscally responsible adult is by training them to handle financial issues as a child. Teaching your kids to manage money is no easy task. They may be much more concerned with what’s going on in pop culture, their latest gadget, or just having fun as a kid. With the growing list of items that they desire, they may really think that money grows on trees. It’s never too late to teach your kid about money, even if they are about to graduate from high school. High school seniors are probably the most important group to equip with financial strategies because they are about to enter the real world. Here are five things to teach your soon-to-be grad before they enter the halls of higher learning:

1. Have them attend a financial literacy program.

Many banks and credit unions offer financial literacy programs that teach young people the principles of financial management. Financial literacy programs teach teenagers how to build good saving habits for the future. They learn how to balance their checking accounts and techniques to avoid overspending. This is all useful information for your soon-to-be college freshman. At the end of these programs, financial institutions often give away cash rewards and other prizes to all attendees. You can complete most programs in two or three weekends. Just beware of the institutions that will push their products to college-bound freshman such as credit cards and car loans. A credit union might be your best bet on this one.

2. Teach your kid how to create a budget.

Creating a budget is an easy process and your high school grad can learn from your example. Does your teen have a summer job lined up? Maybe they are cutting grass, working at the local movie theater, or working at a summer camp. No matter what the job is, you can teach them to keep track of their income and expenses. Your teen will be able to see where they are spending their hard-earned cash. You can either buy them a notepad or give them the gift of financial software. Quicken is one of the most popular personal financial management software programs. Are you looking for free sites that offer planning tools? Try out Mint.com or Wesabe.com. These sites will help you and your grad create a budget in no time.

3. Start a Roth IRA.

You probably thought that you have to be a full-time working adult to start a Roth IRA. Not true! There is no age limit for a Roth IRA. If your high school grad is earning income, they are eligible to contribute to a Roth IRA. What better way to teach your kid the value of saving than to show them how to save for their financial independence. The earlier that you get your child saving, the better their chances at accruing wealth.

4. Show them the family finances.

Many parents don’t like for their kids to see the family finances but your child has to learn sometime. Most kids are unaware how expensive items are. Show them how expensive things like car insurance, utilities, and car payments can be. Let them see how credit card payments can eat up your finances. Introduce them to Mr. FICA so they can see how much money is paid to the government in the form of taxes. This may not be easy, but remember you are preparing your teen for the real world.

5. Let them pay their own bills. 

The last few months before your child leaves for college, have them start buying their own clothes, cell phone bills, and entertainment. If they don’t get a summer job, create a list of chores that are above and beyond their normal ones where they can earn money off of you. If they spend all of their money then they can’t make any more purchases for the month unless they go out and earn more. This is a great way to teach your child how to manage their bills.

Do you feel like your parents adequately prepared you to deal with money management issues in college? If not, what would you like to have known?

(Photo credit: CarbonNYC)

Mark Riddix
Mark Riddix is the founder and president of an independent investment advisory firm that provides personalized investing and asset management consulting. Mark has written financial columns for Baltimore and Washington, D.C. area newspapers and is the author of the book, Your Financial Playbook.

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Comments

  • http://thoughtsonthereallife.wordpress.com Meghan

    This is great stuff. And so important. I graduated high school a few years ago and have, for the most part, made smart decisions in regards to money. My parents never sat me down after I graduated and went over all of these things with me but I saw them live it in their own lives and I kind of took it upon myself to apply it.

    One of the biggest motivations is to help the young person see where they COULD be if they make the right moves (such as opening a Roth IRA this early on!)

    Budgets are great (and needed) but sometimes that can make a person feel “trapped.” It’s important that high school graduates realize that sticking to a budget is actually going to give them more freedom and less stress! Now THEY are in control of their money. Their money is no longer in control of them.

    Great article and much needed as it is already May and many seniors will be graduating soon. I see a lot of articles on college graduates but high school graduates are definitely just as important to educate on these matters.

  • http://www.yourfinances101.com/blog David/yourfinances101

    I would add to this a course in beating them over the head with the dangers of credit card debt.

    It seems this is the age where that all starts.

  • Steven Cooper

    This is great advice. The only thing I would add is instead of having them start paying for their own bills just a few months before they leave home, have them start paying some of their own bills a few years before they leave home. Growing up I paid for all my own clothes, entertainment, gas, and I bought my own car. From my parents not giving me everything they gave me something better…desire. I found ways to make money and pay for things. When I moved out it wasn’t a hard transition since I was already used to paying for things.

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