YOUR HIGH SCHOOL SENIOR TO SELF-SUFFICIENCY – SCORE!
Oh, how time flies! This time last year my step-daughter was a high school senior. I watched her diligently put on makeup in front of a huge ring of light in preparation for her senior trip to Disneyland. The bus was leaving at 4:30 am. It was 3 in the morning. Teens…bloggers, haha. As her graduation was approaching I reflected on her self-sufficiency. There are so many things to think about and prepare to successfully transition your HS senior to live independently.
Normally, there would be high school and college graduation ceremonies happening now through the next several weeks, to celebrate our kids. In our eyes, they are still kids but in the eyes of the rest of the world, they are young adults ready to launch. Parents of teens are also celebrating their impending freedom aka empty nest. Successful Transition of your HS senior to live independently and be self-sufficient is a major score for you!
I know things are at standstill right now but there is essential information every high school senior (or even junior) needs to know. Below you’ll find the major hitter’s parents need to cover to successfully transition their teenager to live independently.
We all know change doesn’t happen overnight. Preparing a child to move from dependency to be self-sufficient and live independently takes years and the best way to is to start as young as possible. For more in-depth reading check out this article, The Need for Teen Financial Education.
If you are reading this and have younger children, a wonderful resource for teaching kids about being self-sufficient is Self Sufficient Kids.com. The host, Kerry, has a free chore chart organized by age for download, along with many other resources and advice. Another excellent site recommended by one of our readers is Prepare My Kid.com.
1. Talk About Money
This one may seem obvious. However, if you do not talk about your household budget and financial goals at home, there are very few other places your teenager is going to get exposure to this type of information. Even if a teacher includes personal finance curriculum into their lessons, the exposure to this at home is very different. Start as young as possible. There are many resources to help with this topic, even if you feel it is not your strong suit. Saving and spending are easy places to start at any age with many daily examples to draw from.
No amount of reading or talking about a topic can replace experience. Giving your teenager experience with family finances will go a long way to understanding the value of a dollar. How about helping with the planning, and budgeting, for a family vacation? Or having your high school senior save and budget for a large expense such as their Senior trip? Being a part of weekly meal planning, shopping with coupons or browsing ads before-hand, and tracking spending is also an excellent way to give your teen independent living skills experience. This will get them thinking about their personal finances in the long run.
Leverage the opportunities that arise when paying your bills and evaluating offers for credit, as well. By exposing your teen to the concept of credit, you are laying the foundation for decisions they will soon have to make. This applies not only as they build their credit, but as they take on school loans.
There are times, as many parents will nod your heads in agreement, that teenagers think they know it all. They will refuse your help with evaluating their school loan offers. Perhaps they will not discuss their application for and use of credit cards AT ALL. You may find your high school senior will not let you show them how to balance their checkbook (yes that was me, sorry Mom).
By at least exposing your high school senior to the concepts of borrowing money, interest rates, and the impact of monthly payments early on, they will have some experience when it comes to making these definitive decisions with long-lasting consequences for themselves. Hopefully, the first credit card statement they receive in the mail is NOT the first time they have ever seen and analyzed a credit card statement.
3. Set Them Up With Their Own Bill (s)
By age 14, your teenager should have their own fiscal responsibility. This is perhaps not the only way, but one of the best ways to teach the value of a dollar. Even if you plan to take the money and set it aside in a savings account for your teenager, a teen should be anticipating, working towards saving for, budgeting, and paying at least one monthly bill.
Until this happens, they will be clueless as to how independent financial skills work. This will also strongly encourage them to find a way to earn income. What to have them pay for? Ideas include their cell phone bill, gas, and insurance once they start driving, discretionary spending (such as video games, mall outings, trips to the movie theatre), or any birthday or Christmas gifts they want to give their school friends.
In addition, having this experience to reference if a lesson does come up in class, will give your teenager a much more solid frame of reference to build upon. Consider this not as a cruel form of punishment, or curtailing their childhood. This is a good lesson on becoming self-sufficient and avoiding entitlement.
4. Establish a Checking Account
According to the NFEC, 13% of all Americans do not have a checking account. A checking and savings account are considered the primary foundation of personal finances. By age 16 at the latest, a checking account is a must. If a savings account is not yet established, it is also a must.
Who writes checks anymore? It is still a life skill that is necessary even with the rapid changes in our payment systems. Ensure you help your teenager get checks printed, and sit down to show them the basics of how to write a check. So simple, yes? Not if you’ve never had a checking account!
Further, help explain that a check or bank letter will be requested by their employer to set up direct deposit of their paychecks. This is a safe, efficient, and recommended practice for their income. Direct deposit is also the perfect segue into setting up online bill pay and automatic transfers into a savings account.
Every high school senior needs to take a personal finance class. Find a community class if it is not included in your high school curriculum (which many school districts do not include). Read a book together. Give a personal finance book as a graduation gift. Here are a couple of suggestions: Official Money Guide for Teenagers (O.M.G.) or The Complete Guide to Personal Finance: for Teenagers. Create experiences for them around family and personal finance. Play games that teach money skills. Always keep learning.
6. Set Them Free
Missing a payment on a bill? Getting into a fender bender? Yes, both scary. Teenagers need experience, however. Without it, they are going to struggle even more once they get to an age where basic independent living skills are required and expected.
It is also better to let them learn through mistakes when they are young, and the consequences are less than if they are already 18.
An exercise in budgeting for living on their own is also an excellent way to prepare them for this big step. There are so many expenses that they have no concept exist until they start looking at what is involved with living on their own. It’s eye-opening to see the numbers once they put together a household budget. “I must make how much each month just to cover my basic living expenses? I need a roommate!”
Additional Transition Support
It’s likely your teen has a plan on what is next, whether that be continuing their education or getting a job. Perhaps both. If you haven’t talked about their housing already, ask. This also gives you a chance to talk about the budget of living on their own, contributing to household bills if they plan to live at home (even if you set that aside into a savings account for them), and helping them save and prepare for renting. Many first-time renters do not realize that credit, employment history, and references are important factors to include on a rental application.
Encouraging them to have a security deposit saved up, first and possibly the last month rent, and money for one-time expenses (such as basic furnishings), are also ways you can help them prepare.
Register Them to Vote
Don’t forget! Encourage your teenager as soon as they turn 18 to register to vote. This is an important part of becoming self-sufficient as well. They may be an adult-only legally at this point, but this responsibility as a citizen can certainly help them act the part sooner rather than later.
It Will Happen
In the end, realize (again) that moving to self-sufficiency is going to take a period of years. Even for a healthy, well-socialized and responsible young adult, there may be some going away and coming back that happens. In other words the ‘boomerang effect’.
After college, I moved back home and worked until I had paid off my school loans. Thankfully, it didn’t take long. I stayed focused and then was even more prepared and capable of living on my own.
With patience, a plan, and progress — it will happen. I haven’t met a high school senior yet that wants to live at home with their parents for the rest of their life!
I can help your kids live independently!
Read more about me here and find the details of my next 6-week Teen Financial Education Course. This course is geared toward teens and young adults in your life. It’s one of the most important classes you could ever give them.
This article originally appeared on The Money Boss blog in May of 2018. Some topics remain timeless. As students graduate, and others head into their summer break in May and June of 2020, in two years there still has not been much progress in the way of financial education requirements for our young adults. Only 5 U.S. states currently require a personal finance class to graduate high school! I live in California, where less than 1% (.78%) of high schools require a personal finance course! It’s appalling.
Michelle Boss is a Personal Finance Coach and Certified Financial Education Instructor. She is certified through the NFEC. As a Professional Money Coach, Michelle helps successful women get smart with money so they can grow their wealth and finally feel financially secure. With Michelle’s Group and One-to-one Coaching Sessions, she helps take the Fear out of Finances.