what every graduating senior needs to know about money

High School graduation represents a milestone for teens, and in many ways, it marks their transition to adulthood. For parents - those who have spent their lives trying to prepare their children to lead productive and successful lives - graduation is an indicator that they are well on their way.

Newly minted graduates may be ready to leave for college or get a job, but how ready are they to manage money, handle credit, and avoid the pitfalls of debt and financial crisis?

"Young adults and college students are among the fastest-growing segments of consumers who file for bankruptcy in the United States," said Faith Tapp, president of Consumer Credit Counseling Service of East Tennessee (CCCS), which serves a 49-county service area. "It isn't typically a single event or situation that results in a personal financial crisis. Instead, it's usually a lack of basic money management skills with resulting consequences that perpetuate over time."
According to Tapp, parents need to take the lead in providing their young-adult children with the information and hands-on practice that will lead to sound financial management down the road.
Here are key financial concepts and skills that all parents need to be sure their graduating senior knows:
How to create a budget - Every high school senior needs to know how to create and stick to a budget. Start with the basics: help them analyze their spending habits, create financial goals, and set spending priorities. Work with them to develop a budget, estimating their monthly income from jobs, babysitting, allowance, etc., and monthly expenses-everything from entertainment, gas and insurance costs, cell phone, and other expenses that they are responsible for.

How to save - If your son or daughter doesn't already have a savings account, help them open one. Then talk with them about developing a savings plan and setting aside a certain amount of their income each month for savings and to cover unexpected expenses. Consider matching some of their savings. This is a great way to teach them the relationship between building a savings account and the positive rewards that follow.
How to use a checking account - Whether your child is heading off to college or starting down their career path, they will need to know how to manage a checking account. Have them take responsibility for some of their own expenses, even if you are providing the income, and let them use their checking account to pay the bills. Have them sit with you when you pay the monthly household bills so they get an idea of what it takes to cover groceries, utilities, rent, and other expenses.

How to use credit cards - Many college students fall prey to credit card offers and quickly get in over their head with credit card debt. While using credit cards wisely can help build up one's credit score, you need to teach your child how to use credit cards and how to avoid some of the pitfalls.

A first step might be getting a debit card that is tied to their checking or savings account and will prohibit them from overspending. Some parents add their son or daughter to their account, helping them build up credit while still being able to review the bills. Other options include prepaid or secured credit cards. Help them review the different credit offers and compare things such as annual fees and payment terms, selecting the card that will work best for them. Whatever the type of card, be sure to teach them that the best way to use a credit card is to always pay off the entire balance when the bill comes in, and to do that, you have to keep that debt within a range you can manage. This will also help them avoid interest charges and late payment fees.

Talk to your teen about using the card responsibly. Other things to be sure to share:
· Keep your credit cards in a secure place.
· Tear up your receipts, outdated bills, and any pre-approved offers you receive.
· Never let others use your cards. You are responsible for any charges made. Too many students get into trouble when their "friends" overspend on their accounts.
How to protect their credit score - A credit score tells potential lenders how well you have used credit in the past and how likely you are to repay in the future. It impacts the types of loans you will be approved for, and the better your credit score, the better interest rates you will receive. Have your high school senior pull their own credit report. This can be done for free at www.annualcreditreport.com. If they haven't established a credit history, they might not have anything on their report, but it is a good idea to monitor the report on a regular basis. Remind them that a credit report is a record of their past financial transactions and that an important part of using credit wisely is to annually review their credit reports. Checking your reports helps you spot errors and serves as a safeguard against credit fraud.
"Common sense and goal-setting can put students in charge of their money and on a steady financial course," said Tapp.

Need help getting started? CCCS provides confidential budget counseling, money management education, debt management programs and other services to help consumers. Contact CCCS at 800-251-CCCS or online at www.cccsinc.org.