Three Money Skills All Teens Need

When high schoolers head off to college, they are taking a big step towards independence and adulthood. During this transition, they will need to figure out how to live on their own and make their own decisions.

Libby Magliolo

One of the life skills they will need to learn is how to manage their finances, even if their parents are footing the full cost of college. For most students, this is a big change from living under their parents’ roof where all the financial activities such as paying the bills and shopping for groceries are made by others.

Away at college, students left to make these financial decisions on their own often make poor choices – the consequences of which can stay with them for years.

To ensure your student starts early adult life on the right financial foot, make sure they have a good understanding of these topics:

How Debt Works and Student Loans: The average undergraduate leaves college with about $30,000 in student loan debt, and if they repay that debt over a standard 10-year term, they will end up paying about $9,500 in interest. College graduates are often surprised by the amount of interest they end up paying and by how long loan repayment can remain a large part of their post-college budget. Make sure your students understand the total cost of borrowing (principal + interest) and that they are responsible for paying any borrowed money back.

How to Use a Credit Card: Similar to student loans, credit card debt can stick with your student long after the purchases they made with that card. When using their first credit card, many students do not understand that they are essentially taking out a very high-interest loan, and many get into debt that takes them years to pay off. Start your students off with a debit card, limiting their spending to what is in their checking account. It will give them good practice without the possible downsides of debt and overspending.

How to Create a Budget: Learning how to budget is such an essential skill because it introduces the idea of making a plan for your money and keeping track of your spending. Even if they don’t put together a formal budget, encourage your student to download an app like Mint that automatically tracks their spending for them. Budgeting and financial goal-setting are much easier once they have a good idea of where their money is going.

These three areas are so important because the effects of loans, debt, and daily spending habits can stay with your student for years or even decades after they graduate college. Ensuring that they understand these skills and the implications of their financial decisions will set them on the right path towards building a solid financial foundation as a young adult.


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Libby Magliolo

Libby Magliolo, an alumna of the SMU Cox MBA program, leads a Southwest Airlines sales training team. Outside of work, she teaches teens and college students about personal finance fundamentals.

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