By Students and recent graduates can get a jump on their financial lives.
It’s graduation time in the Bluegrass, that exciting period when all the local colleges and schools are graduating a whole bunch of kids. Whether it’s kindergarten, middle school, junior high, high school, college or beyond, every one of these newly minted graduates, no matter their age, has a future so bright they’ve gotta wear shades!
From the junior high students mowing yards for the summer, to the high schooler busing tables or working retail, to the college student getting that first real-world experience with an internship, this time of year brings a ton of life changes, and often their first experience earning and budgeting money.
For many young graduates, they’re receiving a lot of advice about right now on how best to maximize their money, and you, the parents or grandparents of these kids, are asking us what advice you should give to your children or grandchildren.
So, here are a few tips:
Educate them about Bank Accounts
First, talk to them about the difference between a checking and a savings account. It’s fine to take that checking account to zero – if there’s another paycheck coming. But, it would behoove them not to take a savings account to zero, unless there is a true life emergency and that account becomes their first credit.
Start an Investment Account
Depending on your child, starting an investment account such as a Roth IRA could be a wonderful way to start saving, not only for a down payment on a future home, but for eventual retirement down the road (even they think they’ll never get there!). Just socking away $50 or $100 a month can make a big difference over 40 years.
Create a Plan and a Budget
I also recommend that they actually think about what they’re going to do this summer, and create a budget of how much is coming in, and what they’re wanting to spend that money on. At this stage of life, they may be saving for emergencies or funding a Roth, but kids also tend to prioritize saving for a car, trips with friends, entertainment, dates with boyfriends and girlfriends, clothes, gadgets, car insurance and gas (once they get those wheels!).
Oftentimes, general categories like these can get youngsters thinking about what will inevitably become a more detailed budget as life gets more and more complex. Knowing how to create and stick to a basic budget will set the next generation of your family up for success when they become fully formed adults.
If you’d be more comfortable with us sitting down and talking to your recent or soon-to-be graduates about their finances, we’d be happy to. Give us a call, and check out the On Your Own plan from FeeForPlan.com – this financial planning package is geared toward new grads and young professionals, and makes a great gift.
Article by David Smyth, CLTC, Senior Partner at Family Financial Partners — a financial services firm in Lexington, Kentucky.
