It’s high school and college graduation season, which means plenty of Gen Zers will be officially “adulting” for the first time in their lives. They may want a new car or a fancy trip as their graduation gift — but is that really the best gift? Though they may beg to differ, the better gift is helping them set themselves up for financial success.
How can parents and other loved ones help Gen Z grads hit the ground running and get off to a healthy financial start during this pivotal time in their lives? Let’s see what the experts have to say.
Help Them Make a Personal Finance Plan
Those freshly out of high school or college may not have much awareness of the basics of personal finance. Parents and other loved ones can help them get on track by working with them on a plan.
“[Help] them create a budget and plan for their future,” said Edith Reads, a professional investment writer, stock trader, personal finance coach and senior editor at Trading Platforms. “This could involve setting up an emergency fund, creating a retirement plan or finding ways to save money on everyday expenses. Having a plan in place will help them stay on track with their goals and make sure they’re making smart decisions with their money.”
Gift Them Personal Finance Books, Online Courses, Apps and Publications
There is no shortage of books that offer approachable yet deep dives into the world of personal finance.
“Consider gifting books on personal finance, such as ‘Rich Dad Poor Dad’ or ‘The Total Money Makeover,” said Zach Larsen, co-founder of Pineapple Money.
Online courses that teach the basics of money management can also be great gifts.
“Online courses or subscriptions to financial education platforms like Coursera or Udemy can provide comprehensive lessons,” Larsen said. “Money management apps like Mint or YNAB help develop good financial habits. Subscriptions to financial publications like The Wall Street Journal keep them informed.”
Introduce Them to Investing
You don’t need a lot of money to get started with investing, and the younger one gets started on this path, the better. Help lead the way.
“Graduates can benefit greatly from learning about the power of investing early on,” said Reads. “Teach them about different investment vehicles, such as stocks, bonds and mutual funds, and guide them on how to create a diversified portfolio that suits their risk tolerance and long-term goals.”
Show Them How To Monitor Credit Score Progress
Knowing how to build good credit is a gift in itself. And you can share it.
“It is critical that they know how to manage and leverage credit to get ahead,” said Brittney Castro, CFP, a consumer finance advocate. “Showing them how to consistently and efficiently check their credit score, with tools like Credit Karma, enables them to keep a healthy credit score for job, apartment, loan and even cell phone applications.”
Share Your Own Financial Picture
Money is often not talked enough about in one’s home. By opening up about your own financial health, you can help ensure that of new graduates.
“Show them your credit score and how it is calculated,” said Alli Williams, owner of FinanciALLI Focused. “Show them your budget and take them through what you do on payday. Explain what a credit card is and how important it is to stay out of credit card debt. Sometimes you have to give examples and show them how to do something to really get your point across.”
Set Up a Consultation With a Financial Advisor
A consultation with a financial advisor is a great present for anyone, but it can be life-changing for new grads.
“Many recent grads wouldn’t consider using a financial advisor, but introducing them to the concept can be a great gift,” said Andy Kalmon, CEO of Benny. “Although you can’t prepay for these services (since the graduate has to sign an agreement with the advisor), many advisors offer a free consultation for potential new clients. Once the graduate sees what an advisor can offer them, you could help pay for sessions to complete your gift.”
Teach Them About 401(k)s and Roth IRAs
If your new grad is in the market for a new job, it’s important that they understand the value of a 401(k) and how to get the most out of it for their future. Roth IRAs are also an important topic to suss out with Gen Zers.
“The earlier you start contributing as much money as you can, all of a sudden, you’re going to be in your 60s, and you’re going to have a very, very robust retirement fund,” said Kimberlee Davis, a wealth manager and the author of “The Fiscal Feminist: A Financial Wake-Up Call for Women.”
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