Many High Schools Lack Financial Education; Parents Can Provide Guidance
Currently, only 23 states require a personal finance course in high school, according to Next Gen Personal Finance. That means the responsibility of teaching recent high school graduates may be on parents' shoulders. And, according to a consumer survey1 from Fifth Third Bank, only 1 in 10 surveyed believe students are well-prepared with financial education for the real world.
If you have a high schooler who is heading off to college, it’s time for some real talk about money. Be open and transparent about the cost of college and how that is being funded. It is important for students to understand how to stay on budget to limit the calls home for money. And consider what surveyed consumers wish they had been taught earlier: savings. Specifically, the importance of savings, starting to save sooner and how to build savings into their budgets.
Regardless of whether a young adult is going to school or work, you can help them get on the right financial path by providing detailed information on budgeting and asking them for a plan. Having them create the plan with your guidance will instill a sense of ownership. Agree together on the budget and then monitor progress on it once a quarter or semi-annually. If there are missteps, talk about them and work together to identify a solution.
Tools like a college savings calculator can help your child understand how much college could cost and potential savings needed. Fifth Third also offers a student budget calculator and tips on why you need a budget.
Finding and knowing your banker
Before your child heads off to college, research banks with branches closest to their campus. Go with them to meet the bankers, open an account if they don’t already have one, and talk about their financial goals.
This also is a good time to discuss bank accounts if you haven’t already. Introduce information such as ATMs and related fees that might be associated with them, balancing their accounts, overdraft fees, budgeting and “smart” savings programs.
Establishing and managing credit
Establishing credit is an important rite of passage toward adulthood, and it’s something that can have a big impact on your children’s quality of life. Some ways to build credit would be for your child to co-sign on a car loan or opening a credit card.
A safety net would be to open a secured credit card with them. A secured card requires a cash deposit and items can only be charged up to the limit of the cash deposit. These cards are generally more accessible than a traditional card and they do work to establish credit. Be on guard against high fees, though, and remind your children to only charge what they can afford to pay off every month. Carrying a balance is not the lesson you want to teach.
Understanding smart apps and digital tools
Smart savings apps or functionality on traditional mobile banking apps are easy ways for young adults to set goals, save toward them, see progress and celebrate successes. It’s a user-friendly tool to help them budget for the things that matter to them.
Credit scores and monitoring
While you’re talking with your children about credit, help them understand what a credit score is: a three-digit number that represents credit history and helps lenders decide whether they're willing to give them a loan for a car, house or another large purchase.
Credit monitoring and identity protection tools are extremely important to have in place. Most banks and credit cards now have services that monitor and alert customers to any suspicious behavior.
Parents want what’s best for their kids – at every age and stage – and a financially healthy future is part of that. Talking about money early and often, providing safe opportunities for students to learn and introducing them to resources that can help, are the steppingstones to good habits and smart choices. There’s never a better time to start than now.
1Survey conducted by Fifth Third Bank in July 2023 among 800 adult consumers residing in one of 11 states in the Midwest and Southeast.
About Fifth Third
Fifth Third is a bank that’s as long on innovation as it is on history. Since 1858, we’ve been helping individuals, families, businesses and communities grow through smart financial services that improve lives. Our list of firsts is extensive, and it’s one that continues to expand as we explore the intersection of tech-driven innovation, dedicated people and focused community impact. Fifth Third is one of the few U.S.-based banks to have been named among Ethisphere’s World’s Most Ethical Companies® for several years. With a commitment to taking care of our customers, employees, communities and shareholders, our goal is not only to be the nation’s highest performing regional bank, but to be the bank people most value and trust.
Fifth Third Bank, National Association is a federally chartered institution. Fifth Third Bancorp is the indirect parent company of Fifth Third Bank, and its common stock is traded on the NASDAQ® Global Select Market under the symbol "FITB." Investor information and press releases can be viewed at www.53.com. Member FDIC.