14 Money Lessons for High School Students

Parents and children can learn together about money and make intelligent financial decisions. There are some essential things that parents can teach their kids about money before they leave for college or enter the workforce. Here are some of the money lessons for high school students that I’ve found most helpful.

1.  College Debt is Real

Parents need to discuss the reality of college debt. It’s a common misconception that college debt is inaccurate because you are only borrowing money from yourself and won’t have to pay it back until after graduation. While this is true, it should also be emphasized that many students leave school with more than $30,000 in debt, making it difficult for them to purchase a home, save for retirement, or start a family. They will be obligated to make payments for years to come.

2.  Money is a Tool, Not a Toy

The second money lesson for a high school student is to teach them money is a tool, not a toy. Money is part of life but it shouldn’t be the happiness of their life. There are many ways to enjoy life without spending money. For example, you can do activities with friends and family without spending any money on them. Another way to enjoy life without spending money is to use your skills to earn what you want or need. Help them understand the balance of being smart financially and using money for enjoyment.

3.  Understanding and Using a Debit Card / Credit Card

Here are some key things to teach your soon-to-be college student about credit cards and debit cards.

• Credit cards give you access to a certain amount of money you can use for your needs. However, if you do not manage your money wisely and have too much debt, you could get into severe financial trouble.
• You can charge your purchases, and the credit card company will charge you interest on those purchases. That’s if you don’t pay it fully off each month.
• Talk to banks and credit card companies to see if they have a first-time credit card for a high school or college student. Most will have a card specifically designed to help beginner credit card users.
• Credit cards should never be used as a source of funds because interest rates are extremely high. It is best to use credit cards to build credit and for emergency purposes.
• A debit card works like a check. You have money in your checking account and as you purchase things with your debit card. Then the money is immediately withdrawn from your bank account. A credit card is different because it doesn’t deduct any money from your bank account; instead, it shows what you owe on your statement each month and charges you high interest.

To avoid overspending with these cards, keep track of their balance by looking at your bank account or checking your credit card statement by logging into those online accounts frequently. That way, when you go to pay for something with your card, you’ll know exactly how much you have left and won’t spend too much.

4.  Never Spend More Than What You Make

This is the most important lesson and the simplest to teach. Explain to them they can only spend the amount of money they make. Teach them if you want to buy that new laptop or car, save up for it. Let them know how they are going to witness friends frivolously spend money but don’t make the same mistakes. Discuss when it is appropriate to use loans to purchase things, and how loans shouldn’t be a crutch. Don’t spend on credit cards hoping you can pay them off later.

5.  Budgeting Monthly

Most college students don’t have a lot of money, so it’s essential for them to realize that you need to budget your money every month. The best way parents can help high school students understand this is by showing them. Have them sit down with you as you work on your personal budget. Offer them templates to use. Help them form healthy budget habits to include rewarding them for each month they check their budget and notify you. If you do this, they’ll be able to come out of college ahead and not behind.

6.  Saving up for Big Purchases

Teach them the lesson of working hard and the satisfaction they will get saving for a big purchase. If you want to buy something expensive like a new car or new bike, save up for it! It’ll take some time, but the wait will be worth it when you get your dream car or laptop! It would be best to try to save up for what you want instead of getting a loan because it’s better not to be in debt and owe someone else money.

If you think they are struggling to come up with savings, then you should consider reviewing how they budget. Help them understand where they can reduce spending by doing things like cutting cable or eating out less often – both are examples where personal budgets can be utilized effectively to save more cash.

7.  Understanding Wants vs. Needs

This is a critical money lesson for high school students to learn. Tell them the next time they are about to buy something to ask themselves whether they need it or want it. This mantra can really change financial outcomes. Describe to them a need is eating food, a want is eating out. It’s okay to buy something that is a “want” but not at the expense of your finances. If they have saved for that want, then perfect they have earned it. Hopefully next time your son or daughter is faced with a new iPhone coming out, and some of their friends have already begun bragging about theirs, they will think about whether or not it is a need or want.

8.  Putting Financial Priorities in Order

When it comes to finances, it’s essential your high school student knows what’s most important in their life. No one ever gets everything they want and sometimes it takes a long time to get something you want. They need to learn how to prioritize their needs and wants. For example, they want a new snowboard, they like to travel, they like eating out with friends, need to buy schoolbooks and they have a car that started making a terrible noise recently. Walkthrough a scenario like this with them where they must pick what would be the top priority for them and coach them if they choose to save for a vacation verse car repair.

9.  Saving and Investing

Saving some extra cash is always good. Most of us didn’t start investing until way later in life. Try to educate your high schooler on the power of investing. Explain to them that investing in something that will make you more money throughout time. It is also important to tell them it comes with risk.

For example, tell them if you saved $30 a month for ten years and got an 8% return, their contribution would be $3000 total and the investment would be worth $5,488. This doesn’t mean that you shouldn’t also be saving your money and putting it towards things like vacations or gifts for friends and family.

We highlighted how investing is important to mention to your high school student, but it is equally important to teach them about saving in a savings account. Teach them the importance of having a rainy-day fund.

10.  What To Do When You Don’t Have Enough Money

Every soon-to-be college student needs to know the answer to this. If you’re having trouble making ends meet each month, there’s no shame in asking for help. Reassure your child they can always come to you. It isn’t necessarily the parent’s obligation to bail them out, but you can offer support and give solutions if they ask. Let them know if they don’t want to talk with you about the subject that it is okay to talk with someone else. Explain to them the other people they can reach out to.  Such as talking to a counselor at school or searching for a financial counselor or speaking with a financial coach.

11.  Credit Score

Getting a credit card is an essential way to build up their credit score. Your high schooler will need to know this and the following about credit score. A credit score is an indicator of the creditworthiness of an individual, based on factors such as on-time payments, history on cards, amount of cards you have. It can play a major role in purchasing cars and homes with better interest rates.

A credit score is a numerical expression based on a statistical analysis of one’s credit report that indicates the likelihood that an individual will pay their debts promptly. It is calculated by taking information from many different sources and creating a rating.

Lenders often use credit scores to determine whether they will extend new credit to individuals and at what interest rate they will offer that credit. The higher the score, the better your chances are of getting approved for loans or other types of credit. Your child will need to understand the importance of building good credit so they can buy a house one day or get a business loan or finance a car.

12.  Cars and Car Loans

One thing you need to make sure your high school student understands before heading to college is buying cars. Cars are an expensive investment, and it’s a great idea to drive one to help your future career. However, there are some things to keep in mind when thinking about buying a car:

1) Used cars are a lot more affordable. Do your research. For any car you are interested in buying it is wise to take the car to a mechanic to get looked at. You will also want to take a look at Consumer Reports to know the reliability of the car you are looking at. Don’t forget to purchase a car report to know the history of the vehicle.

2) Make sure you know what you’re getting into before signing the contract! Don’t be concerned with losing the car to other buyers even if it is a great price. There will be another that comes along. It is better to take your time and be diligent.

3) Know your credit score – if you don’t, it’s not too late! If you must get a loan know your credit score beforehand this will help you understand if you have more leverage when it comes to negotiating with terms.

4) Under no circumstance should you ever take out a car loan for more than 80% of the car’s value- remember that the interest rates on these loans can be high and will affect how much money you’re paying back.

5) Be careful with leasing cars instead of buying them. It’s appealing to drive a nice new car with affordable monthly payments. However, the person leasing the car is in business to make money and leases end up being more expensive.

13.  Don’t Let the Financial World Intimidate You

Having the proper knowledge and understanding of the financial world can be intimidating for high school students. It’s a world filled with words that you may not understand, like 401k and IRA, and numbers hard to keep track of. However, it doesn’t have to be this way. You can make the most out of your money and become financially independent when you graduate high school with the correct information. The more you learn now, the less likely you will get in over your head later on in life.

As you learn more about the financial world, you’ll also have a better understanding of what your parents are talking about when they tell you to pay back your debt or save for retirement. By the time you’re graduating high school, you won’t be afraid of financial concepts or words, and you can start making intelligent decisions with your money right away.

14.  Set Clear Financial Goals

Every high school student and soon-to-be college student should have a clear financial goal and work towards it. This goes for any age! Remember to set realistic, attainable goals and have time frames. For example, if you want to make $5,000 by when and how do you think you can achieve it. Help them walk through thinking about how they will attain their goals.

If a goal is too difficult or unattainable, it can cause stress and anxiety, which negatively affect your health. When you’re stressed out about something that’s not possible to achieve, breathe in deeply through the nose for three seconds, then exhale all of the air from your lungs and hold for five seconds before inhaling again through your nose. This technique will allow you to release pent-up energy without causing any damage to yourself or others around you.

Next Steps

These are some of the main money lessons for high school students. Whether or not as a parent you have great financial habits you still have the obligation to your high schooler to properly prepare them. Schools don’t teach money management, parents do! If you feel like you could use some help a BlackBird Financial Coach can work with your high schooler to prepare them. In a few sessions, your high schooler will be prepared to manage money properly and will be well ahead of their friends with financial literacy!  Get in touch with a financial coach today.

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