The Free Application for Federal Student Aid (FAFSA) is filed and before long your teen will be off to college. But before your young adult turns the tassel on the graduation cap, here are three smart money tips your teen can take with them long into adulthood.
Importance of financial literacy
Teens often think they know everything. However, it never hurts to help your teen learn something new anyway. You can improve your teen’s knowledge about money basics. This helps take much of the mystery out of establishing and practicing good financial habits, such as creating a budget or saving for a car. Learning this habit now is a great takeaway for tomorrow, next week and beyond!
Basic advice on investing
If your student has a little cash saved after covering the agreed upon essentials, it might be a good idea to show your teen how investing works. (If you need a primer, read Take control of your financial investments.) Adding money to a certificate of deposit (CD), for example, is a smart way to earn a higher dividend on existing savings and ensure your teen has a little something to fall back on later.
Don’t spend it all in one place
Like the old-time candy, “Now and Laters” (where you have some now and save some for later) encourage your teen to apply the same principle to money. Encourage your student to take advantage of mobile personal finance managers (PFMs). Check with your bank or credit union to see what’s available.
A PFM can help them keep track of what money they have and what they spend using their mobile device. After a pattern starts to develop, they may find ways to save more and spend less. Just remember data charges may apply when they use their device.
But here’s the fun part! With the PFM on a mobile device your teen can track investment performance. Your almost-adult may see savings grow and gain real-world experience about investing at the same time.
Take the time now to share basic money tips with your teen. Your young adult may even thank you later.
Article provided by Local Government Federal Credit Union.
The advice provided is for informational purposes only. Contact your financial advisor for additional guidance.