Financial Planning Tips for High School Students

Get started with good habits

a young woman in her graduation gown and hat with her parents
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When you graduate from high school, you have a variety of options available to you. You may be planning to go to college in the fall or you may be working full time. You may decide to join the military or you may plan on taking a year off to decide what to do with your life. Your parents may be willing to help you get set up, or you may be expected to shoulder the majority of your expenses on your own. Here are 10 financial tips that should help you no matter what your situation.

Set Up a Budget

The first thing you need to do to is set up a budget. If you are planning on going to college, you should include your school expenses and create a college budget. If you are planning on working, you need to estimate how much it is going to cost to move out and how much you need to have saved up for a deposit on an apartment. You will also need to budget for expenses such as utilities, clothes, food, and fun. 

Prioritize Your Spending

A budget is not enough to move you toward your financial goals. It is important to prioritize your spending so that you are moving forward and not just maintaining the status quo. Make short-term goals such as saving up for the deposit on your first apartment or for the down payment on a car, and be sure you are setting money aside for that. Take into consideration upcoming school expenses and be sure that you are saving enough to cover those. Your grants and student loans do not cover all of your college expenses.

Work on Establishing Your Credit

It is important to establish your credit now. Making on-time payments for a car loan or on your apartment can help you do this. One option is to build your credit using a credit card, but if you just run up a balance you may end up hurting yourself in the long run. Part of establishing good credit is making sure that you do not make any mistakes with your cards. Be sure to pay off your balance in full and on time each month.

Note also that you cannot apply for credit under age 18 at all, and if you are under age 21 you will need to show proof of ability to repay. You can, however, ask your parents if they are willing to add you as an authorized user on their account.

Think About Insurance

When you were in high school, you were on your parents’ health insurance and car insurance. It is important to make sure you have the proper coverage once you graduate. Your parents may be willing to keep you on their health insurance while you are in school, so be sure to check with them first. Similarly, your parents may be planning on having you on their car insurance while you attend school, but you cannot assume that they will do this.

If you're planning to rent off campus, you will need to consider renters insurance to cover any theft that may happen in your apartment.

Plan for Your Future

If you do not create a financial plan, chances are you will not ready when you want to take the next step. This can include things such as buying a new car, purchasing a home, or getting married. Although these events may sound like they are in the distant future, you can start planning for them now.

Putting money aside to cover down payments or added expenses will allow you to do the things that you want when you are ready. If you are in college, you may be more focused on avoiding student loan debt and you may not be as worried as saving up for a down payment on a home. However, if you are going straight into the workforce, it's best to start saving now. Create a five-year plan that will outline the steps you want to take in the next few years.

Protect Yourself

Expenses will come up that you do not expect—from car repairs to medical bills. If your parents can help you through college, they may be willing to chip in on this, but you are now ultimately responsible for these expenses. An emergency fund can help you cover the unexpected and take the pressure off. Start out by saving one or two months of income or $2,000, then you can build it up to a year’s salary as you work on your other financial goals.

Make Plans for College

Completing a college degree or pursuing vocational training can improve your financial future. If you are not already planning on going to college, then you should look into other training options or explore other ways to set yourself up for a successful career.

If you are already planning on college, you need to set up a college budget and determine how much you need to earn to cover college costs. Even if your parents are helping you out, you should work over the summer to save up money for incidentals and other fun.

Take the student loan counseling that your college offers seriously because your loan choices will significantly impact your finances for years to come. 

Think About Retirement

If you are working full-time, it's a good time to start contributing to retirement. As soon as you qualify for your employer’s 401(k) plan, begin making contributions each month. This will come out of your paycheck automatically. The sooner you start saving, the less you will need to contribute each year. If you do not have to play catch up later one, you may even be able to retire early. You can also contribute to an IRA as long as you have an earned income.

Balance Your Checkbook and Use Money Apps

Taking the time to balance your checkbook each week can help you save money in overdraft fees. It will also help you avoid a mess that can be difficult to bounce back from. You cannot trust the balance at the ATM because it does not reflect all of the money that you have spent, so it's easy to accidentally overdraw your account. Using an app that handles both budgeting and balancing your account can make it much easier to balance your account

Be Smart With Your Money

Be sure that you are making smart money choices when you graduate. This includes paying your bills on time and carefully evaluating decisions such as when to take on additional debt for a car or on credit cards. Starting out with solid financial habits will set up a good foundation. Instead of spending years recovering from mistakes, you will be ahead because of your wise choices. 

Article Sources

  1. Consumer Financial Protection Bureau. "CARD Act Report," Page 13. Accessed March 16, 2020.

  2. Charles Schwab. "Can You Contribute to an IRA If You Don't Have a Job?" Accessed March 16, 2020.