As we get older, we often think to ourselves or hear our friends say, “Man, I wish I knew XYZ about finances when I was younger.”
Entering into a world where you are responsible for all of your finances can be a little overwhelming. Most high school students are not taught how to manage their own finances or budgets, so there can be a big learning curve upon graduation.
So, what can you do to prepare your high school student to understand spending and finances? We’ve put together a little list.
Savings start now
Many high school students have a part-time job. Sometimes this might be for bills, but most often their job supports their lifestyle, or sometimes dictates it. It can be tempting to spend all of your money on frivolous items. When you have worked hard to earn cash, you want to do with it as you please. Encourage your high schooler to put aside a certain amount every paycheck or after every shift. Whether this is a certain amount or percentage, this will teach how to diligently build savings. We suggest showing a chart of how their savings will grow over time.
Purchasing a vehicle
There is one very important factor high schoolers should know if a vehicle purchase is in their future: cars are depreciating assets. It should be made known upfront that the moment a car is purchased, its value decreases. Make sure your student makes a list of top priorities for their vehicle, and ensure they know the importance of paying notes on time should that be the route they choose.
You’re a credit card company’s ideal candidate
The moment a bank account is opened, your high schooler should expect dozens of credit card offers a week to make them sound essential. Make sure you explain credit and credit cards to your high schooler before they commit to any kind of offer. Most credit card debt begins at a young age due to a lack of awareness. Help your student avoid this costly mistake.
The “B” word isn’t all bad
Budget. No, it doesn’t sound fun, but it can actually provide freedom for someone’s finances. There’s much to be said about security, awareness, and control over one’s finances. Helping kids start a budget early can prepare them for financial success down the road as well as help them to understand the daily costs of living.
Money does not equal happiness
While control over finances is important, earning a large paycheck will not equal happiness for young people. Encourage them to pursue education, healthy living, recreational activities, and also how to work hard for their money. Balance is key.