Thursday, May 14, 2009

Graduation Present: A Financial Lesson Plan For Seniors

What Every Graduating Senior Needs to Know About Money," that's the title of this guest post from Consumer Credit Counseling Service:

"Here are a few things every graduating senior needs to know....

How to create a budget – Every high school senior needs to know how to create and stick to a budget. Start with the basics—help them analyze their spending habits, create financial goals, and set spending priorities. Work with them to develop a budget, estimating their monthly income from jobs, babysitting, allowance, etc., and monthly expenses—everything from entertainment, gas and insurance costs, cell phone, and other expenses that they are responsible for. If they are moving into an apartment with a roommate, they need to consider what would happen if that roommate suddenly leaves—how will they handle the bills on their own?

How to use a checking account – Whether your child is heading off to college or starting down their career path, they will need to know how to manage a checking account. Have them take responsibility for some of their own expenses, even if you are providing the income, and let them use their checking account to pay the bills. Have them sit with you when you pay the monthly household bills so they get an idea of what it takes to cover groceries, utilities, rent, and other expenses. Consider having them sign up for a CheckWise course at, which will help them learn to manage an account responsibly and may help them be approved to open an account at a local financial institution.

How to save – If your son or daughter doesn’t already have a savings account, help them open one. Then talk with them about developing a savings plan and setting aside a certain amount of their income each month for savings and to cover unexpected expenses. Consider matching some of their savings. This is a great way to teach them the relationship between building a savings account and the positive rewards that follow.

How to use credit cards – Many college students fall prey to credit card offers and quickly get in over their heads with credit card debt. Teens and college students should not apply for a credit card until they have a job. A responsible first step might be getting a debit card that is tied to their checking or savings account and will prohibit them from overspending.

How to protect their credit score – A credit score tells potential lenders how well you have used credit in the past and how likely you are to repay in the future. It impacts the types of loans you will be approved for and the better your credit score, the better interest rates you will receive. Have your high school senior pull their credit report. This can be done for free at If they haven’t established a credit history, they might not have anything on their report, but it is a good idea to monitor the report on a regular basis. Remind them that a credit report is a record of their past financial transactions and that an important part of using credit wisely is to annually review their credit reports. Checking your reports helps you spot errors and serves as a safeguard against credit fraud.

“For most young adults and college students, it isn’t typically a single event that leads to financial crisis, but a lack of basic money management skills—skills they won’t likely learn in school,” said Jessica Cecere, president of Consumer Credit Counseling Service (CCCS) of Palm Beach County and the Treasure Coast.

“Common sense and goal-setting can put students in charge of their money and on a steady financial course. Parents need to take the lead in providing them with the information and hands-on practice that will lead to sound financial management down the road.”



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