Four Things I Want My Daughter to Know by High School Graduation
It’s graduation season and I’ve been thinking about the lack of personal finance education in the schools. Here are 4 things I think that every person graduating from high school needs to know by graduation.
- Banking – We should know how to interact with a bank or credit union, open an account(s) and use the account(s) wisely, tracking what goes in and out of the accounts. Checking accounts to be used for monthly deposits and normal spending. Savings account is where you keep your rainy-day fund (aka Emergency fund) to cover future expected or unexpected expenses that arise (car breaks down, get sick, unplanned vacations with friends, etc.)
- Creating and managing a simple budget. Once we begin making money, you should have a plan for how you will spend or save it. Budgets can be simple or complex but starting out it can be a simple list of “Money In” and “Money Out”. Knowing where your money goes is a great way to stay on top of your finances. Two of my favorite cash flow/budgeting apps are:
Tiller Money is a spreadsheet-based budgeting and financial planning tool that automatically populates a spreadsheet with all of your financial transactions and account balances. It costs $79/year and allows you to customize your data to your liking.
- Living within your means. If you’re spending less than you make, you have enough money to cover all expenses and are earning more money than you’re spending. This allows you to save money for your financial goals, and it also gives you a cushion in case an emergency arises and you need extra cash.
- Pay yourself first. By saving a portion of your paycheck before spending on bills, groceries, or discretionary items, you can build up a nest egg to secure your future and create a cushion for financial emergencies. Without savings, many people report experiencing a large amount of stress or getting into trouble with credit card debt.
For More Information:
A great resource for teaching your child about how to manage money, check out Rob Lieber’s “The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money”.
And check out our prior Mainstreet articles: