New high school grads might be ready for the real world, but many aren’t ready for real-world finances.
A recent survey found that just 38% of Americans learn about money from their families, and only 15% learn it in school.
Studies show 75% of teens lack confidence in their personal finance knowledge, and 32% don’t know the difference between a credit card and a debit card.
So, what should your grad know before that first paycheck?
Recent grads should start with making a savings plan. Nearly 6 in 10 Americans don’t have enough savings to cover a $1,000 emergency.
“The importance of starting a savings plan starts with trying to establish some type of emergency savings account,” said Joel Garris, president of Nelson Financial Planning.
He says it’s equally important to establish a “debt” plan.
“Because credit card debt these days can often be 25% to 30% in terms of the interest cost,” explained Garris.
We’ve got some simple steps to help your grad create a budget.
Start with apps like Monarch and Quicken that can make the process easier.
A common budgeting method involves allocating 50% of your income toward necessities like rent, food, and gas, 30% toward wants, and 20% toward savings.
Encourage automatic savings, building credit slowly, and most importantly, not comparing their finances to what they see online.
“Stay off the internet or social media to help maintain some grounding and perspective as to what your financial picture looks like,” Garris said.
Another important lesson for new grads: protect their money. Identity theft affects about 1 in 20 Americans each year.
Experts say teach your teens to monitor their accounts, use strong passwords, and never share personal information online.
A few smart money habits now can set your grad up for a lifetime of financial confidence.