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 This week’s column, provided by American Express Financial Advisors, is third and last in a series. The first two installments appeared on November 22, 2001 and January 3, 2002. Approaching Adulthood with Financial Know-How According to the American Savings Education Council’s 1999 Youth and Money Survey, 94 percent of participating students worked full- or part-time jobs the previous summer. Unfortunately, the same survey also reported that only about half the teens interviewed thought it was very important to save any of their hard-earned money. Here are a few ways to help turn your free spirit into a financially savvy adult. Instill fiscal responsibility. By the time they are ready for college, young adults should be able to balance their own checkbooks, pay bills in a timely manner and plan for their personal living expenses. By requiring high schoolers with part-time jobs to plan and follow a budget, you can help make sure they are able to manage their money when it’s time to leave the nest. Teach by first-hand experiences. One way to teach investment basics is involving your teens in the selection process when you purchase individual stocks or mutual funds. They are likely to have strong opinions about the companies they perceive as the “best” choices based on their own consumer preferences. That’s not necessarily bad – many financial advisors recommend investing in something you know. However, you can show them that you should always research a stock before investing, and then track price changes in the financial section of the newspaper or on the Internet. Warn against excessive debt and credit card abuse. The main way to create awareness of credit-related issues is to maintain an active dialogue on the subject with your kids. Describe the dangers of excessive debt and the benefits of keeping a good credit rating. Get a copy of your own credit rating and go over it together to illustrate its long-lasting effects. Assume a new role. This transition to adulthood is often more difficult for parents than it is for children – particularly if you see departures from your own way of doing things. As you move through this important education process with the young adults in your home, don’t be afraid to seek help. An excellent resource is the Jump$tart Coalition for Financial Literacy, an organization that seeks to improve the financial skills of young adults by promoting the teaching of personal finance in grades K-12. Jump$tart’s website includes a clearinghouse of financial literacy curricula and other educational materials. Another resource you might find useful is the American Savings Council. March 21, 2002 American Express Financial Advisors Inc. Member NASD. American Express Company is separate from American Express Financial Advisors Inc. and is not a broker-dealer.
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