Your kids are moving through the high school and college years. They surprise you with their independence and, at times, their immaturity. Yet, you can see the adult emerging. The day-to-day demands of parenting seem to be easing off, but you know some of the biggest lessons about adulting lie ahead.
In trying to prepare your teens and young adults for their future, it is all too easy to focus on the immediate skills they need that are sitting right in front of us (laundry anyone?) and overlook some of the most important, but perhaps less obvious life lessons, especially those involving money. As we help guide our kids into adulthood there are four fundamentals we need to teach. Earnings provide our security. Savings finance our dreams. Spending expresses our values. And, giving speaks to the very core of our humanity.
Under those broad categories here the 11 things every teen should begin to learn and every young adult should be able to do:
- Apply for a job by filling out an application and preparing for an interview. This might also include setting up a LinkedIn profile, writing a resume and cover letter and following up inquiries with emails or phone calls. Teens should be comfortable asking for references from a teacher or coach. When starting a summer job or full-time employment, they should know how to fill out a W2 (with a memorized social security number!) and understand withholding and take-home pay. Later they will need to understand how to fill out their tax return.
- Create a budget that is both flexible and realistic. Teens and college kids need to learn how to plan their spending around their income, leaving an adequate allowance for unexpected expenditures. It may help to remind them to always distinguish between “wants” and “needs.” By working through this budget together, you will be able to suggest ways to save money and how they can carefully track their spending. They should learn how to set aside funds for savings and even a small amount for giving, as these behaviors, begun early, can set the foundation for lifelong practices. Some parents choose to match a small amount of their kid’s savings, as a company might do with a 401(k), in order to reward and encourage the practice. Check out this Capital One blog post to learn more about how teens can earn, save, share and donate their money.
- Use their health insurance when needed. They should understand how and when they will need their insurance card, what deductibles are and how to save money on items like generic drugs.
- Manage their money. While our parents may have taken us to a bank teller window to learn how to monitor our finances, much of what you need to teach your teen is right on their phone. This is a great chance to cover the basics in financial literacy and, through the use of finance, budgeting and banking apps, show your college student how to monitor their spending, pay recurring bills, set aside regular savings and transfer money. Show them how to set up important text or email alerts that can help them to monitor their spending or keep track of earnings that are directly deposited. Their phone will be the key to monitoring their balances and avoiding potential overdraft penalties, minimum balance fees or other charges. It is also time to talk about identity theft and ways to keep their personal information safe.
With your teen or college student you can compare the different terms offered by banks before opening their first account and this will familiarize them with the cost associated with their banking. They should plan their savings carefully and, perhaps with guidance, figure out the best vehicle for investing those funds over time. You may want to be a joint owner on their account for some period while they learn the basics of managing their money. Capital One offers accounts designed just for teens, find them here.
While the conversation may focus on money, the message is all about your family’s values. How we spend our money reflects what is important to us and our savings are an investment in our dreams of further education, a car or travel. This is the time to explain how, through the power of compound interest, small savings can, one day, finance big plans.
- Apply for Credit. While the notion of placing a credit card in a young person’s hands can be a frightening one, it is essential that college students learn to pay credit card bills promptly, establish credit in their own names and have the financial means to deal with an emergency. Read this Capital One post for more tips on what to look for in a credit card for a student. Credit histories may become relevant the first time a college student tries to rent an off-campus apartment, thus learning how to earn and maintain a healthy credit score cannot begin too early. There are credit cards designed for first time users and the application process is a great opportunity to explain the importance of understanding the APR (Annual Percentage Rate), annual fees and other charges. Read more from Capital One about how to choose the right first credit card here.
- Understand how to get health care when they need it. This involves knowing when to visit a doctor or walk-in clinic versus an emergency room. Your kids should have adequate knowledge of purchasing and using over-the-counter medications, as well as how to manage any prescriptions. And perhaps most importantly, they should be knowledgeable about their own health history and be able to answer a practitioner's questions.
- Execute their responsibility as a citizen. As teens pass their 18th birthday they gain new privileges that come with some very adult responsibilities. They need to know how to register and vote, as well as understand what being called for jury duty entails. Males need to also register with the Selective Service. To become an informed voter, they need to become even more conversant in the issues of the day.
- Find a place to live. While many freshmen live in dorms, your student may be on their own after their first year in college. Finding an apartment, knowing how to work out living arrangements and shared expenses with roommates, negotiating with a landlord and understanding and signing a lease are all important skills a teen might need as early sophomore year. They will need to know how to set up and pay utilities and how to discontinue them after they move. This guide from Capital One can help you determine where your child should live in college.
- Cook healthy meals on a budget. The move away from the dorm may also mean a move away from the university cafeteria. Your young adult will need to learn to shop for groceries keeping in mind their budget and meal planning. They need to learn the rudiments of cooking and why living on take-out and pre-packaged meals may not be the best solution for their budget or their health.
- Give to those in need. While most college kids and young adults live on very tight budgets, perhaps even supplemented but their parents, they can still learn the basics of giving to others. Teach them to look on Guidestar or Charity Navigator to see how effective a charitable organization has been and to ask questions of any organization they are interested in supporting. They should view their philanthropy as an investment in and expression of something that matters to them, and do their research accordingly.
- And yes, they should know how to do their laundry. They should know what items cannot be put in a washing machine and how to make minor repairs to items of clothing rather than simply replacing them. They should understand when it makes sense to invest in an important and long-wearing item of clothing, like a coat, while not wasting money on lots of trendy items that will soon be pushed to the back of their closets.
We can easily overwhelm our kids as we hand over more and more of their adulting responsibilities to them. The key is to operate as their coach and guide them through each of these categories knowing that each is a process that will take some time.