WASHINGTON (8/12/14)--Young adults might be smart enough to get into college but often are ignorant about even the most basic financial skills. This is not surprise--in the United States less than half of the states mandate a course in personal finance as a requirement for high school graduation (GTN News
Further, a 2014 financial literacy survey by the National Foundation for Credit Counseling (NFCC) reveals that the majority of adults say they learned the most about personal finance from their parents. This is true whether mom and dad possess good or bad financial habits.
Does your young-adult student need a crash course in personal finance? The NFCC provides a checklist of basic knowledge that will benefit everyone managing his or her own money:
Budgeting. Be clear with yourself and with your student about how much money is available for expenses. Help him create a workable monthly budget that balances income, loans, and gifts with anticipated expenses. This discipline is a skill that will pay benefits for a lifetime.
Recording financial transactions. Show your student the importance of recording all transactions in a check register or monitoring online, tallying the running balance daily, and balancing financial statements every month. Tracking expenses might reveal some surprises (60% of your income is spent on dining out?) and provide opportunities to change direction.
Using credit. Tell your student why it's important to commit to paying each credit card bill in full and on time each month. By using credit wisely, she will be learning how to live within her means while creating a positive credit file that could help when buying a car, renting an apartment, obtaining insurance, and even landing a job.
Getting financially organized. Help your student commit to keeping all financial records, bills, and bank statements in one location. This will help ensure that he will pay bills on time, avoid late fees, and keep an unblemished credit score.
Recognizing the dangers of identity theft. Discuss forms of identity theft, the kinds of personal information that need to be protected, and how to protect them--even, and especially, from friends and roommates. Discuss the pitfalls of careless, unprotected use of social media.
The NFCC recommends that parents and their young adult leaving the nest make an appointment with a certified financial counselor at an NFCC member agency location. Hearing financial advice from a professional may have a stronger impact than hearing it from mom and dad. To find one near you, call 800-388-2227 or use NFCC's DebtAdvice.org. The staff members at your credit union are also valuable resources.
For related information, read "Money 101: School Your College-Bound Child" and "The College Affordability and Transparency Website: Tools to Make Informed Choices" in the Home & Family Finance Resource Center