A: High school students are only several short years from adulthood – and with it, the financial freedom to take out loans, sign leases and charge to credit cards. Many teenagers don’t have the patience for long financial conversations, so prioritize the following tasks and discussion topics.
1. Help open a checking account. Children over the age of 13 can open a checking account in most states with a parent or guardian’s signature. If opening an account is a possibility, go to the bank with your children and sit down with a banker who can help explain how to deposit and withdraw money, use a debit card and the consequences of an overdraft. Having a checking account will help your teens get used to banking and will make it easier to manage their own money if they have a job, car or other financial obligations.
2. Encourage a part-time job if appropriate. All children are different, and while some teens are eager to go to work as soon as they’re able, others may need some help identifying appropriate opportunities. If your children are consistently requesting money for gas, clothing or other discretionary expenses, part-time jobs may be a good idea. However, be sure that your children continue to focus time on school work and other important extracurricular activities. A part-time job can help teens establish a work ethic, meet friends and professional contacts and earn some extra cash along the way.
3. Communicate about paying for college. Whether you intend to fund your children’s education or expect them to save their earnings and take out student loans, it’s important that you discuss college finances with them. Setting expectations about paying for higher education well before your children are filling out college applications is crucial. The longer your teens have to seek out scholarships and save more of their allowance or income from a part-time job, the better. If you plan to pay your children’s tuition, be honest about what you’ll be able to afford, and what expenses (if any) you won’t pay, like room and board or textbooks.
4. Suggest setting financial goals. If your teens are earning an allowance or a regular paycheck, suggest they establish two or three financial goals to accomplish before graduation. Whether they wish to save for college, a down payment for a used car or a gaming console, learning to establish and track progress toward a financial goal can help them understand the basics of managing money.
Remember that good money habits can be taught with the right amount of financial support and independence. High school is the perfect time for your children to take on real fiscal responsibilities – and become comfortable with them before the financial pressures of college set in.
Christopher Zarra, CFP®, ChFC®, CFS®, is a Financial Advisor with Ameriprise Financial Services, Inc. in Rockville Centre, New York. He specializes in fee-based financial planning and asset management strategies and has been in practice for 22 years. To contact him, www.ChrisZarra.com,
(516)764-0951, 119 N. Park Avenue, Suite 307, Rockville Centre, NY 11570.
Ameriprise Financial Services, Inc. Member FINRA and SIPC.
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