If you have a high school graduate, this blog is for you. Graduating high school is a huge step closer to the “real world” and the real-world costs money. It is important to prepare your graduate for the financial changes and obstacles that come along with college and the workforce to ensure their ability to save and secure their financial well-being throughout their career.  

 

Why Prepare?  

Attending college is a huge financial decision and investment in their future self. It is important to share with your high school graduate the changes that come along with college and the workforce bring so they don’t suffer financial consequences.  

 

Setting Up A Budget 

Budgeting is a great practice to be smart with money, especially throughout your graduate’s college years. Whether they have an income, savings, or an allowance they are working with, it is crucial to implement a plan to have them follow a budget. The better they can budget throughout their school and social life, the better off they will be when they enter the workforce and have to allocate their income.  

 

Your child is likely to model your financial habits and behavior. Starting their college years with solid financial habits can help them start to recognize their wants and needs more clearly and make priorities to build a good financial foundation.   

 

Prioritize Spending  

Prioritizing spending comes with learning from their mistakes. As they implement their budget, it will become easier to prioritize their spending. When teaching your graduate about their spending priorities, it is important to set short and long-term goals for the time they are in college as well as where they’d like to be when they enter the workforce. Financial goals are constant as we all know the importance of saving our money for the present, the unforeseen, and the future. 

 

Establishing Good Credit 

College tuition can add up and if your graduate plans to take out a loan, it is extremely eye-opening to understand how that can affect your credit. Establishing good credit at this stage of life is crucial for their future and can affect so much. From college apartments to purchasing their own home one day, making payments on time to develop good credit is essential.  

 

Planning For The Future 

College is often a time when kids experience their first taste of financial freedom. Allowing them to make decisions and develop good habits during their college years will only set them up for success when they enter the workforce. Encourage your graduate to incorporate a financial plan including their goals and values. The sooner they can begin stashing away money for their future and even retirement the better off they will be when they are financially on their own.  

 

1. Five Year Plan 

A five-year plan is an approach to outline the steps it will take to reach their goal. This could include paying off debt, buying a home, purchasing a car, reaching a savings goal, or anything that is important to your graduate’s financial well-being and future dreams. Although many of their big goals may be in the distant future, planning sooner than later will be beneficial to reaching them.  

 

2. Emergency Fund  

Although it feels like expenses in your college years come up unexpectedly, creating an emergency fund for expenses your child will incur will assist in holding them accountable for covering the unexpected. For a student who may be working part-time, it is suggested they put forth 10% of their income towards their savings for emergencies. This also forces your student into making the decision about what is and isn’t an emergency.  

 

Solid financial habits are hard to teach without implementing them into the phase of life they are in. College is a great time to challenge your child with financial freedom because chances are they are more likely to take their spending and saving more seriously. Not having proper financial planning and habits for college and the workforce can have serious financial consequences for both students and parents. By the time your child enters the workforce, your child will not be recovering from financial mistakes, but well ahead with wise habits.