Have you seen the school buses driving their practice routes down your street yet? It is just a matter of time until the lazy days of summer come to an end, and with it a new beginning of the school year. If you have a teenager or young adult in high school or college, this can be a crucial time to reinforce some great financial practices that can help the next generation become financially independent. As a mother of three young adults, I have seen huge progress with a few simple ideas:
- Work! Studies show that full-time college students with part-time jobs earn better grades and graduate with less debt.* Working 10-15 hours a week during the school year helps young adults budget their time, provides income for their expenses and can help them build a resume and make important networking connections. Summer time is the perfect time to push for full-time hours and really build up the savings.
- Have skin in the game! Young adults can help with expenses by paying their age percentage of car repairs and a gradually increasing portion of their car insurance as well as their own gas. This gives them a reason to get that part-time job and really helps eliminate the sticker shock when they move out on their own. My kids paid a portion of their car insurance from the moment they had their own car and it increased gradually every 6 months. When they moved out on their own, they were financially ready right out of college because they knew what to expect.
- Incentivize saving! I matched every dollar my kids saved toward their first car (up to a certain limit!) and also toward their Roth IRA contributions while they lived at home. They got a 100% return on their hard-earned dollar, but more importantly they developed the habit of living on less than they made and investing for the future. They had to pay cash for a used car, so this really enforced work ethic and savings.
Young adults are capable of so much if we provide guidance and structure. The new school year is the perfect time to help guide them!
*https://www.mcpherson.edu/2022/02/full-time-college-students-who-work-part-time-reap-better-grades-and-graduate-with-less-debt/