Money Lessons and Tips for High School Graduates

Passing on financial wisdom could help your grad achieve their financial goals.

Graduating from high school is a major milestone for teenagers, but it’s equally important for parents. You’ve worked hard to support them through those formative years, and now that they’re ready to take on the world—whether that’s getting a job or going to college—they also need to take on financial responsibility.

You have the opportunity to help prepare them by sharing money lessons you’ve learned over the years. If you’re not sure where to start, we’ve got your back. Here are some key money lessons that you could share with your grad.

Key Takeaways

• Discussing finances and smart money moves with your high school grad may make it easier for them to adjust to living more independently.

• Building a budget and establishing savings could help grads reach their financial goals.

• For grads heading off to college, understanding their financial aid package is an important step to creating a sustainable plan.

General Financial Wellness Wisdom

Whether your kid is heading off to college, starting a job, or taking some time to figure out their next move, there are a few pieces of financial wisdom that could benefit them for a lifetime. Here are some tips you may want to pass on¹:

Track Expenses and Build a Budget

Depending on your family situation, your teen may be experiencing real-life expenses for the first time. Cars alone are costly, with gas, repairs, and insurance, but if your kid is also contributing to rent, paying for clothes and other personal items, and still trying to have a little left for fun, money management is an important skill for them to learn now.

A good place to start the lesson is with tracking expenses. During this process, they can examine how much money is coming in and going out, and they may begin to see some patterns. If they, and you, think some further structure would help, building a budget may be worthwhile—it could make it easier to be on-time with payments and to intentionally set aside savings.

Set Money Aside for the Unexpected

Speaking of savings, it’s important for young adults to learn about saving for a rainy day. As you know, phones get dropped, computers die, and other life expenses come up. Having a rainy-day fund could help give them (and you) peace of mind—they have the funds to handle an unexpected expense and don’t have to turn to credit cards, or you, to cover the cost. Pro tip—suggest they set those savings aside in a high-yield savings account to help that money grow.

Save for Fun

Life is supposed to be fun, and when you’re young, fun is a big priority! But it can also be expensive. Encourage your child to have a fund for splurge purchases too, like concert tickets, new electronics, a weekend away, or anything else they enjoy outside of their necessities.

Don’t Misuse Debt

Some forms of debt like student loans are useful tools to help reach certain goals. But other forms of debt may be easy to misuse.

Wondering if your young adult should have their own credit card? In today’s society, credit cards are not only convenient but also often necessary. However, before your young adult goes down that path, make sure they’re educated on how a new loan or credit card could impact finances. Building credit is important and should be encouraged, but building credit wisely is key.

Understand Credit Scores and Reports

Speaking of credit, for recent high school grads, whether they’re going to college or not, learning about credit and taking steps to build credit is an important part of any financial journey.

Encourage your new grad to get familiar with their credit report and credit score and start developing a positive credit history. Someday, when they want to finance a new car or rent an apartment, they may feel more confident having their credit run and better understand what it means.

Establish Longer Term Goals

Everyone’s financial goals are different, but learning how to create those goals, and achieve them, are important life lessons. Financial goals may include future purchases, saving for a degree, and even starting a retirement account.

It’s not too early for your teen to save for retirement—even if it’s just by contributing a small amount each month to an IRA. It may make a huge difference in the long term. For example, depositing $100 a month to a traditional IRA, starting at age 18, results in over $400K by the age of 65.² However, the same monthly amount starting only five years later yields less than $300K by age 65.³

Tips for Financing College

For a new grad heading to college, there are some additional financial considerations to keep in mind, especially if the student is responsible for college costs. Here are a few lessons to pass on.

• Understand the financial aid package: More than 85% of students receive some type of financial aid.⁴ Encourage your college student to go through their financial aid package and ask questions at the financial aid office—it’s important to understand what expenses are covered and what they need to pay out of pocket.

• Be familiar with loan options: With more than 44 million student loan borrowers in the United States,⁵ taking out a loan to pay for college is normal. But your student needs to review the types of loans they have access to. Federal and private loans may have different rates or repayment terms. Advise them to keep track of the loans they take out and be mindful of the repayment schedule (and amounts).

• Consider working while in school: If Federal Work-Study allocation is part of the financial aid package, they will likely get assistance with job placement on campus as part of the program. Otherwise, they could take on a part-time job off campus (balancing schoolwork, of course) to help limit the amount of debt needed to fund education. The less burden they have after college, the sooner they’re able to start the next stage of their financial journey.

Final Thoughts

Graduating from high school is an exciting time, and as your teen transitions to their next big adventure, help guide them with lessons about money. Financial needs change at every stage in life, but providing the right education and support from the beginning may help your young adult build a strong foundation to achieve financial wellness in years to come.