Financial Capability 101: Simple steps for high school grads

by Brenda Campbell, President and CEO, SecureFutures

It’s graduation season! This is a time of celebration and taking pride in accomplishments, but it can also be a time of anxiety as final preparations begin for entry into the world of adulthood. Whether you’re the parent of a high school graduate or a grad yourself, it’s easy to be overwhelmed by the many changes and challenges of life after high school.

While there are plenty of things that are beyond our control, my thirteen years as a leader in teen financial education has taught me that there ARE steps you can take to lay the groundwork for future financial stability as you enter into the new responsibilities of adult life. Financial capability is all about thinking ahead, forming good habits, and making simple but impactful changes in your day-to-day approach to handling money. Here are a few of the ways I’ve seen young adults establish a firm financial foundation:

1) Track your expenses. Know where your money is going.

2) Keep a budget. You won’t get where you want to go if you don’t have a plan. This is especially important if you’re in college and need to determine how much you’re going to take out in student loans.

3) Speaking of loans – you don’t have to take every loan that’s offered to you! This goes for both student loans, for those pursuing higher education, as well as other kinds of lending. Only take the loans you need, and don’t forget that you have to pay them back, and with interest.

4) Know the pitfalls when it comes to credit cards. As a recent grad, you will likely get bombarded with credit card offers, and this is the place where young adults are most likely to get into trouble. It’s smart to establish credit, but remember that credit is also a loan. Think before you use it. Only charge what you can pay off each month, except in an absolute emergency. And never use a credit card for a cash advance (where the interest rate is even higher).

5) Know your credit score and how it is calculated. Missing payments or making late payments will lower your score and limit your chances of getting loans later. You can even get rejected by a landlord because of a low credit score.

6) Get a job. Not only will you have extra money, but you’ll have less time to spend it. And students who have part-time jobs are better at managing their time and studies.

7) Establish an emergency fund. This is the other place that young adults get into trouble. Cars break down and medical situations happen. Not having this fund can lead to more debt.

8) Know the difference between needs and wants, and make smart spending choices. Invest in your future instead of accumulating a bunch of stuff that you won’t care about a few weeks or a few months from now.

Yes, adult life is complicated, but I don’t think financial capability needs to be! With the right approach, I believe every young adult has the ability to achieve financial stability and work towards their goals. The world is yours!

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To learn more about ways that young adults can plan their financial futures, check out SecureFutures’ new financial planning app, Money Path, or contact info@securefutures.org to ask about bringing our programs to your school or community-based organization!