A Dozen Financial Topics High School Students Should Know

High school banking

1 How bank accounts work. Provide your student a basic understanding of checking accounts and savings accounts. Show your new banking customer how to use checks and debit cards to pay for goods with their funds. Teach them how to access their accounts and reconcile their statements each month.
2 How credit cards work. Teach your child how credit cards work. Stress the importance of understanding that credit card spending actually creates a loan. Too many young people create credit card debt that they are unable to pay back. Emphasize the importance of not carrying a balance by paying off credit card debt each month.
3 Tax basics. You do not need to create a tax expert, simply a smart consumer that understands the basics of tax. When your student receives their first paycheck, walk through their paystub to explain Social Security, Medicare, federal tax withholdings, and state tax withholdings.
4 The power of the retirement account. While a tough concept for a young person, let them know the availability of long-term savings tools like a Roth IRA. The wise saver can create a self-made millionaire by starting their retirement savings at a young age.
5 How credit scores work. While no one really knows all the aspects that go into creating a credit score, you still have access to a free credit report each year. Consider walking through your child’s free credit report with your student.
6 Spending within your means. Save first then spend. This is a simple concept that is hard to accomplish. By teaching your student this habit early, you give your child a fighting chance of creating strong financial habits.
7 The art of saving. Part of spending within your means implies that your student has healthy savings habits. Walk your child through the techniques that work for you. Perhaps it is setting up a separate savings account. Perhaps it is putting a set amount away each month.
8 The strength of investing. The most valuable investment a young person can make is in themselves. Whether it is a college degree or a trade school diploma, your student can create tremendous value in skills that will provide a positive financial return each year.
9 Mutual fund and stock understanding. With an understanding of self-investment, next consider teaching your student some of the basic investment alternatives available to them. Stocks and mutual funds are most common, but also consider explaining bonds, CD’s, annuities and other investment tools.
10 Budgeting. Help your student create a basic budget and then help them track their savings and spending against this budget.
11 Cash flow. The hard way to learn the lesson of cash flow is when bill collectors are calling and there simply isn’t money to pay them. When creating an initial budget, show your student the flow of funds each month. An easy example of this is to show the flow of funds that relate to a car. There are everyday expenses like fuel, there are monthly expenses like a car payment, and there are periodic expenses for car insurance.
12 Calculation of net worth. Assets (what you own) minus liabilities (what you owe others) equals net worth. This is the math of banks and businesses. The sooner your student understands this concept, the easier it will be to plan to purchase a car, a house, or any other item of value.
13 The bankers dozen: The value of identity.Perhaps one’s personal identity is the most undervalued asset owned by your student. Online media may seem free, but your student has paid for this access with their identity. With the advent of identity theft, government/employer access to personal online information, and the proliferation of online advertising, consider helping your student understand the value of having a small online footprint. Help them establish healthy habits that will protect their personal information.