Many high school graduates are clueless about money management. They know how to get it (from us) and what to spend it on (cool stuff). I enjoy not having to worry about my daughter’s future. My college co-ed is responsible and able to handle her financial affairs. With a full pocketbook and an almost empty nest, I can relax more and travel as I wish. Here are strategies that worked for us:
Teach her how to make money
My daughter earned her allowance. In preschool she earned rewards for each task performed. As a teen, she had a regular payday (Fridays). I provided written instructions, and she had deadlines to meet. I chose routine jobs that were a good fit for her busy schedule. Beginning in 10th grade, she had the option either to find a job or to volunteer.
Deposit 10 percent in a personal savings account
By the time she was 18, saving money was a well-established habit. I opened a joint account after her 7th birthday. We scheduled occasional withdrawals for special planned purchases. For a stronger incentive, I began matching her deposits dollar for dollar at the end of each year.
Show her how to do a budget
Every August, my daughter and I made a list of our personal goals and a financial plan. At the beginning of Junior High School, we opened a joint checking account. She started paying for her own stuff: school pictures, yearbooks, dance lessons. When she ran into trouble, we revisited and updated her personal budget. By 12th grade, she paid for her own medical and prepaid cell phone bills using a gradually increased allowance.
Open a prepaid debit card account
Upside Visa has an excellent program for teens. I would deposit allowances into her account and keep an eye on her spending. Eventually, I gave her one of my gas cards. It is a great way to monitor her gas mileage while away at college, and she always has a full tank for the three-hour ride home.
Focus on building credit
My daughter occasionally had an unplanned expense (class ring, prom gown). When she begged for a small loan, I played along to teach her about interest rates and late fees. Later, I co-signed for a small loan (used car) with her. She filled out the paperwork and filed it in her bedroom (I kept a copy too). We set up online bill pay in our joint checking account, and I make sure her monthly payments are up-to-date.
There are tons of online financial resources out there for you to use including financial games, worksheets and advice. Don’t wait, start now!