Graduation season is an exciting time filled with new opportunities and challenges.

As a parent or guardian, you’ve guided your child through their educational journey, and now it's time to prepare them for financial independence.

With graduation, summer programs, and other senior send-off events, it’s easy for young adults to speed through a budget and exhaust their finances as they prepare for the next phase of their lives: adulthood. Here are some key financial lessons to teach your graduating senior to set them on the right path.

Budgeting and Expense Management

One of the most critical skills for young adults is managing their finances. Teach your graduate how to create a budget by listing their income sources (e.g., part-time jobs, allowances, or scholarships) and their expenses (rent, groceries, utilities, and entertainment). Encourage them to track their spending using spreadsheets or secure budgeting apps and stress the importance of differentiating between wants and needs.

Student Loan Management

For college graduates, student loan repayment can be a major concern. Help them understand their loan obligations, including:

• The difference between federal and private loans
• Their repayment options and grace periods
• The earning potential of their career path
• Their interest in future education endeavors
• The impact of loan payments on their overall budget
• Strategies for early repayment to minimize interest costs

Saving and Investing Early

Encourage your graduate to start saving early by opening a checking and/or savings account or considering a retirement savings account for long-term investments. Discuss the importance of:

• Building an emergency fund for 3-6 months’ worth of expenses or longer if needed
• Taking advantage of employer-sponsored retirement plans, like a Roth IRA, 401(k), 457(b), or 403(b) with matching contributions such as a 401(a)
• The power of compound interest and the benefits of investing early
• Understanding how to manage and build good credit

Building a Smart Spending Mindset

Financial independence comes with the responsibility of making wise spending choices. As your child transitions into adulthood, your role as a financial guide remains invaluable. By instilling these financial lessons early, you can help them build a solid foundation for a successful and independent future. While they may make some mistakes along the way, your guidance will ensure they are better equipped to handle financial challenges responsibly.