One day I was surfing Facebook and noticed a meme that was getting passed around like a Cuban cigar. The topic? African-American parents need to stop kicking their kids out of the house just because they hit 18 years old. The rationale is that high school graduates are too young to find careers, which leads to bad financial decisions and accruing a lot of debt. Many people agreed with this notion. I surely didn’t.
The problem isn’t that young adults can’t thrive in the real world; they have for generations. The issue is that parents don’t prepare kids for life after the family house, then get frustrated when they make poor decisions. My mama didn’t raise me like that. I got a job at Sonic, a fast food chain, when I was 17. Even though it was my idea to work, it was my mother’s idea to make me responsible for paying the internet bill in our home. Even though it was only $20 a month, she knew that I would quickly become conscious of how fast a paycheck can slip away. I also had to do my share of chores to receive a weekly allowance from my dad—and I needed that cash, as I was only earning $5.15 an hour. I wasn’t pleased then, but 17 years later, I’m thankful that my parents had the foresight to teach me the value of a dollar earned.
Meanwhile, I had tons of friends who didn’t receive the financial basics back then. As a result, they were clueless when it came time to independently balance their wants versus their needs
Experts say that having macro and micro conversations about personal finances early and often is a must for teaching kids healthy money habits. “It starts with having a conversation about money before teens graduate from high school,” says Reshell Smith, a certified financial planner based in Orlando. She advises parents to be proactive, even if they are still learning themselves. “For example, instead of letting teens get a credit of their own, wean them into it by letting them be an authorized user on their parents’ card. By doing it this way, activity can be monitored.”
Whether you’re an aunt or uncle to a teen, have younger siblings heading to college, money talks should be on your mind. Here are some things to consider.
Help Students Establish Bank Accounts
Approximately 93 percent of Americans have bank accounts, but 20 percent of Blacks are unbanked or underbanked. That number rises to almost 50 percent for Latinx households. Unbanked folks typically use check cashing facilities, which charge predatory fees. In addition, it’s harder to save without bank accounts. Teach teens the banking basics: Help them build a relationship with a solid bank and check in to make sure they keep accounts in good standing.
Talk Emergency Funds and Savings
It’s never too early to start building a savings account. Discuss the importance of having just in case money and encourage teens to start putting away a little something each time they receive money.
Encourage Secured Credit Cards
Secured credit cards require holders to pre-pay their entire credit limit. Users build credit each time they use them and repay the balance. They are great for students for two reasons. First, their spending is controlled. Second, they understand the value of their dollars. Each time they have to pay off the balance, they will think about the fact that they are paying twice—a good lesson about debt.
Break Down How Student Loans Work
It’s easy to think of loans as future money and disconnect from how much you’re actually borrowing. Explain how student loans work, and talk about what it’s like to pay the monthly bill after college. Discourage students from taking out money for living expenses, and encourage them to work for spending money instead—and pick schools that offer full rides.
Don’t Make Money Talk Taboo
You don’t have to share how you’ve spent every dime or how much you bring home each paycheck, but giving students realistic expectations about finances requires some candor. Make money talk casual. Discuss how much things cost, budgeting, general salaries, and lessons you’ve learned. Real talk leads to preparation.