“4 Money Lessons They Should Teach in High School”

Growing up in America we are taught many valuable things in high school, but an area that has historically been ignored is personal finance.  While Chemistry is almost always on the curriculum (I haven’t had to recall the periodic table since my 11^th grade exams), everyday skills like budgeting typically are not.  Thankfully, programs like junior achievement and foundations in personal finance are starting to change that narrative and we can only hope the trend will continue.  In this week’s post, we put together four crucial lessons every student (and some adults) should know before they leave high school.  If you have a student in high school, or simply a family friend at that stage of life, feel free to share these tips with them.

Lesson 1: Learn the Basics of Budgeting

Budgeting is crucial to achieving your financial goals.  COVID recently made people painfully aware of this reality. While budgeting is a simple concept, it often gets overlooked.  Especially as high school students graduate and go on to start their career or attend college, there are monthly expenses they will need to learn to prepare for. These could include:

• Rent/Mortgage
• Utilities
• Insurance
• Car Payments
• Groceries
• Health Insurance

Understanding what it looks like to live below your means and plan for upcoming expenses is a muscle that you want to train early on in life!

Lesson 2: How to Use a Credit Card

It’s so important that teenagers learn early on how a credit card works and, more importantly, how to avoid racking up high-interest debt.

College students and young adults are easily targeted by credit card companies with enticing offers for new lines of credit. Understanding how credit cards and interest work can save these young adults hundreds, and possibly thousands, of dollars.

When it comes to using a credit card, always remember:

• You have to pay back what you charge
• Credit card interest accrues daily when you carry a balance
• Your interest rate can play a huge role in your monthly bill if you aren’t paying your charges completely off each month

While building up credit is important, it should never be done at the cost of paying exorbitantly high interest rates.  If you are finding that you can’t consistently keep a credit card fully paid off each month then reverting back to a debit card could be a smart move.

Lesson 3: How to Build Credit

Having a good credit score can make a big difference in how you manage your finances as an adult. If you’re looking to buy a house, buy a car, or rent an apartment, having good credit can make things much easier.

Building good credit can involve positive financial habits including paying your bills on time, keeping credit card balances low (below 30% of your available limit) and limiting the amount of credit card accounts you open or use.  Maintaining good credit can make that first rental or property purchase enjoyable!  Working with a trained financial planner can help instill the good habits necessary to improve your credit score.

Lesson 4: Understand the Basics of the Stock Market

The stock market can be a confusing place for people of any age, let alone young adults just out of high school. Consider introducing your teenager to the basics of the stock market at an early age. It will give them the foundational knowledge needed to understand the importance of investing in achieving larger financial goals.  If you’re not confident in your ability to properly explain the stock market to your children, working with a financial planner can help get the message across. Even starting small now could yield large returns for your teenager later in life. I would even argue that having them experience some stock market losses is an extremely valuable lesson to learn while their income and stakes are lower.  Helping them understand long-term investments and how the market works now could be an impactful life lesson they’ll thank you for later.

We learn a lot of things in high school, but unfortunately so many of those things are not the practical items that will help us in our daily lives after we graduate.  Help your teenager, grandchild, or family friend hit the ground running with these helpful financial tips.