It’s That Time of Year Again for Graduates…

It is graduation season. Many families have been planning for their child’s graduation. The invitations where sent out, the grad gifts purchased and the party is ready after the commencement and ceremony. These are exciting times for kids as it develops their self esteem and gives them a sense of accomplishment. The parents are proud to see the diploma in hand and pose for the photo that will inevitably be posted on Facebook for everyone to like.

Whatever level of education your child is graduating at, it is as good a time as any to instill them with good money habits. The earlier the better. Because we all know that once they hit the teenage years, all of a sudden they think they know everything there is to know about the world. They have no idea what is in store for them in the “real world”. Here are some suggestions to help them be ahead of the curve when it comes to being smart with money:

Budgeting for Graduates:

Whether they are earning an allowance, have a part-time job, or you fund their living expenses, show them how to make a budget. Sit down with them and work out a spending plan. Find out what they like to spend money on and help them budget for it. Teach them the importance of living within their means. Clarity is power. The clearer they are about money and how it is made and spent, the brighter their future will be.

 

Savings for Graduates:

If you have not already, open a savings account for your children. It is important for them to understand how they will get ahead if they save their money. By showing them that their money actually works for them through compounded interest they are more apt to do it. If they received cash for a graduation gift, direct them to put it into their savings account. Kid’s minds are full of messages from society that they have to have the latest and greatest things every other kid has. I like Suze Orman’s advice of only spending a maximum of ten percent of your savings on any one purchase. You can teach them two valuable lessons here; money can work for them and they don’t need to keep up with the Joneses.

 

Checkbook for Graduates:

When they turn 18, take them to the bank and help them open a checking account. You will be giving them a jump start on how to use a checking account to pay for their future bills. The numbers are staggering on how many people don’t know how to or don’t even bother to balance their checkbook each month. Bouncing checks is not an option. This is where you come in and show them how to balance the debits and credits each month in their checking account.

 

Debt for Graduates:

Debt has become an addiction in our country. College students get an early taste of that addiction. It is a touchy subject for many families, since in order for their child to get ahead they will need to send them to college and with raising tuition cost they need a student loan. While on campus the student is then persuaded to get their first credit card. Credit card companies flock to campuses across the country to get students to sign on the dotted line for their first card. Love your kids enough to have a college saving plan in place so you limit the amount of student loan debt they will need to carry. Teach them that if they are going to take on a credit card that the balance has to be paid by them in full each month.  Best of all teach them on how
not to get into debt.

 

Being Responsible for Graduates:

Teach your kids about being responsible with bills. When a bill is due it is time to pay it. Would you believe that late fees is a multibillion dollar industry? Car loan, credit card, and mortgage companies love people who don’t pay bills on time. That $25, $50 and higher late fee are additional  revenue sources for companies. Honoring your agreements is important in life. Being responsible is great character development for your kids, and it will spill over to other areas in their life like showing up to work on time.
I firmly believe that education starts in the home. So it is time to enroll your kids in the education of money so they have a bright future ahead of them. “The real world” will not be so hard on them because you showed them the way. Oh, by the way, make sure you are setting the example. You can’t preach to the choir if you are not doing it yourself.

 

Tim Mann is a highly sought-after financial coach who meets with local clients in his sunny office in Los Angeles, CA as well as clients from around the world via phone and video. He wrote the best-selling book Money on Your Terms, and coaches individuals and couples on how to overcome their money challenges they are facing. He also hosts his biweekly radio program, The Money on Your Terms Show, where he educates listeners on all aspects of money and invites industry leading expert guests to discuss relevant topics about money in today’s world. Tim spent the majority of his career in the world of finance working for companies such as Morgan Stanley, Investor’s Business Daily, Home Savings Mortgage, and Silver Star Automotive Group. He holds a bachelor’s degree in Business Administration and Real Estate. He is passionate about having people live with money on their own terms instead of everyone else’s terms.

If you’d like to learn more, please explore the site, sign up for Tim’s FREE newsletter or get in touch to set up a complimentary consultation.

Leave a Reply

Your email address will not be published. Required fields are marked *