The end of high school marks a significant milestone. As they embark on their next chapter, here are ways to help them start off on the right financial footing.
SAN ANTONIO — The end of high school marks a significant milestone in a young person’s life. As they embark on their next chapter, here are some ways to help them start off on the right financial footing.
You can help a graduate lay down a good foundation by teaching them to invest in themselves. According to a survey by Bankrate, nearly 30 percent of American adults have no emergency fund and about 18 percent of people say they can survive off their savings for about six months.
“Pay yourself first. It’s something that my grandfather always used to say and that basically, means to save,” said Karl Eggerss, senior wealth advisor and partner of Covenant. “The situation we find ourselves in right now is a great reminder that we have to have a rainy day fund or emergency savings for at least 3 to 6 months of expenses.”
Eggerss said saving money at a young age will pay off big-time. He explains the power of compound interest.
“People that are about to graduate, the biggest advantage they have over someone older is their age. Because the longer you save, the more the money has a chance to compound on itself and it literally snowballs. A few hundred dollars a month early on saving, investing can literally turn into a million dollars by the time they retire,” explained Eggerss.
Another strategy that can help graduates is to help them keep debt low. If higher education is their next step, strategize how to keep loans to a minimum or decide how fast you can pay back any borrowed money. The cost of tuition continues to rise. According to Nerdwallet, the average student loan debt for one person is about as much as a new car.
“You’re going to get credit cards sent to you. You’re also, going to have student loans available to you. You really need to decide, what is the return on my investment? If I borrow this money, will it really amount to a higher income for me in my profession and the future and is it really worth doing?” explained Eggerss. “The longer you go on, it’s really hard to pay off those large student loan debts. It’s a big problem in this country.”