7 Rules to Prepare Your Graduate’s Wallet for Life

Just because you have a child graduating from high school doesn’t mean she or he is done with school, even if there are no plans for college. You still need to teach them about money, or someone else could “school them” by taking advantage of their inexperience. Graduating from high school is a time for adventures and growth. These rules will help young people avoid disasters and regret. After all, it's harder to enjoy life with an empty wallet.

Checking account customers need to decide whether to apply for overdraft protection. There are good reasons to have it, and there are also good reasons not have it. Having overdraft protection can help your child put gas in the car even if there is no money in his or her checking account. As long as people can pay back their overdraft balances quickly, having overdraft protection is a great convenience.  However, if the user can’t pay back the overdraft balance and it keeps growing, it will eventually reach a limit. If the user doesn’t pay back the overdraft balance, it will result in the checking account being closed and it will be very hard to get a checking account anywhere.

It is good idea for new adults to start a habit of always having an emergency savings fund in the bank. This doesn’t have to be a lot of money — $500 is a good start. Most 18 year olds are not going to be impacted by a broken down furnace. However, many young people drive older cars that can sometimes need unanticipated repairs. Parents agree that the bank makes for a better emergency fund than mom and dad.

For many new adults, having a car is a sign that they are grown up. The nicer the car, the more accomplished they feel. Obviously a paid-for car is easiest on the budget. If the new adult wants to get a car loan, the interest rate will be extra high unless a more credit-worthy adult cosigns. The cosigner needs to be prepared to make the payment if the young adult can’t do it, or risk a damaged credit score. The smaller the payment and the shorter the term, the better. Of course many young adults can get by without a car, especially if they are going to college, which is set up to accommodate students without cars. A rule of the thumb: more car, more poor.

It is smart for parents to sign on to their new adult’s checking and savings accounts and also sign up for online / mobile banking. This will allow parents to monitor usage, provide advice, and even transfer funds if junior is running short.

Many new adults are new to using debit cards and monitoring and reconciling their checking accounts. If a debit card is stolen and the new adult does not notice it, her/his checking account balance could be cleaned out by the thief. Fortunately, people are more protected against losses from stolen debit cards if they report it soon. To help monitor for unauthorized debit card usage, it is a good idea to sign up for fraud notifications such as Zions Bank’s Bank’s Mobile Fraud Alert Service and Purchase Alerts.

ATM’s are everywhere and convenient to use. However, when you use an out-of-network ATM, you pay a fee. When you use an in-network ATM, there is no fee. If there is no in-network ATM nearby, your new adult can avoid paying a fee and still get cash by making a debit purchase at a store that will allow for a cashback option.

This is probably the most important step. A child does what feels good, but an adult does what is responsible. It is a good idea to plan each month’s budget in advance to make sure income is not exceeded by spending.