Practice Life Skills
Becoming an independent adult involves many things — household duties and chores, managing time and money, and planning for a future far beyond high school. If your senior’s competency in certain skills isn’t at a comfortable level, a refresher might be due.
Why It Matters
- There’s no better time for money conversations.
Handling finances is a lifelong task and taking charge of personal finances gives purpose toward future goals. If your senior will attend college or live independently after high school, budgeting skills should be at the core of your household conversations to set the groundwork for your student’s strong financial future. - Household bills are never-ending.
You know what bills your income needs to pay, but does your student? Explain the various bills that require payment every month — mortgage or rent, cell phone bill, utilities, groceries, insurance — and pinpoint which ones require priority because the amounts are fixed and outside of your control. Discuss how discretionary expenses occur after other obligations are met and the importance of saving for them. - Real life involves more than financial skills.
Parents always want to be there for their children, but there are and will be times you aren’t able to be. Take advantage of the time you have with your student at home to discuss the finer points of household management, planning family schedules, simple car maintenance and meal preparation.
What Your Student Can Do Now
- Determine preferred banking methods.
Your student may have established savings and checking accounts at a younger age, particularly if a paycheck from a high school job was directly deposited into one. If not already discussed, determine how each account’s funds will be used. Checking accounts are useful for essential daily transactions using a debit card or check payment. It’s also valuable for automatic payroll deposits, as well as for fixed monthly payments for car insurance, rent, utilities and so forth. Many people prefer to use savings account funds only in emergency situations or if necessary to supplement a checking account for unexpected expenses. - Monitor accounts.
Monitoring bank accounts helps prevent potential identity theft, and a banking app makes it extremely convenient for this purpose. Even with the safeguards that financial institutions have in place, it’s beneficial to keep a watchful eye on banking activity. Thieves employ very clever measures and do not discriminate among their victims — everyone is at risk. No doubt you’ve heard the stories and the studies indicating identity theft occurs every two seconds. We offer a handout explaining different ways information is stolen and protective steps you and your student can take to avoid becoming a victim.
What Your Student Can Do Later
- Find other payment methods.
Caution your student about the ways debit cards can be skimmed at points of sale. Different types of electronic payments, such as Venmo or PayPal, and swipe-to-pay apps (Apple Pay, Android Pay, Google Wallet) can be used to combat debit card scams. Research them carefully, although your student may already have some familiarity with using one as a convenient way to request money from and pay friends for incidentals and such. - Knowledge is power.
Check into any college classes offering personal finance or accounting where investments, consumer loans and basic consumerism or economics is taught. Encourage exploration into additional courses that may offer more in-depth information than what can be offered in high school. Many college students are eager to be prepared for adult life once their college experience concludes and may begin exploring the benefits of opening an individual retirement account (IRA) on their own before finding post-college employment. - Educate yourself about credit.
Federal law restricts lenders from offering credit to anyone younger than 18 years of age. But it’s helpful to know how credit works now in order to have healthy credit later on. Credit cards are a useful tool, but only when used wisely. They offer a higher risk for establishing poor credit than good credit and should really be considered a high interest rate loan. Credit cards also create a mindset of “buy now, pay later,” which contradicts the concept of saving for large purchases.
What You Can Do
- Offer suggestions about saving and spending.
Determine the minimum amount that should be kept in your student’s savings and checking accounts to avoid overdraft fees or other surprises. Savings can be earmarked for a special purpose, like education or training after high school, thus emphasizing goal-setting and ownership. Consider making your student responsible for paying for certain expenses, such as clothing, special trips, spending money or college materials. - Discuss the pros and cons of credit cards.
If your student demonstrates responsible spending and banking habits, consider making him an authorized user on one of your cards. Any purchases he makes with it are then his responsibility to pay. Rescind the card if that doesn’t happen. Eventually help your student research credit card options with any potential rewards programs, rebates or cash back initiatives, etc. Regularly using the credit card and paying off the entire balance each month will create the positive credit history both you and your student want.
Next Steps
Be sure to complete the survey questions at the end of this article to be entered into the 529 deposit giveaway!
Additional references, handouts and talking points are available in the right sidebar to use at your leisure. They may prove beneficial to reference now or after receiving future emails — we’ll leave it completely up to you. Use our emails like a recipe for a successful outcome — assemble the recommended ingredients and then follow accompanying directions to add flavor and depth.