Q: Our oldest daughter recently graduated from high school and she’s not sure what she wants to do for a career just yet. She’s decided to take a year off and work, and maybe travel. What practical advice can I give her so she uses her time and money wisely?
A: Congratulations on your daughter’s graduation; this is a milestone in most young adults’ life. When a young person is unclear about their work future, taking a year off to make some money, see the world and reflect on their career path can be a good decision.
Her job for the next year is to make and save money and get some clarity on her future. Your job as her parents is to gently guide her in making some good decisions and learn about the real cost of living. Here are some suggestions to help you get her on the right path:
- I encourage you to come to an agreement with your daughter to pay a set amount of rent each month. This will teach her to budget her money carefully. You may decide to set aside some or all of the money she pays you into a savings plan for her use when she decides what kind of post-secondary education or career she wishes to pursue. This may make it easier to get her buy in as well.
- Now that she is working, she should accept responsibility for her own expenses including transportation, clothing, communication (e.g. cell phone), and spending money.
- Before she gets comfortable with her new income, sit down with her and discuss the importance of creating and living within a spending plan (a budget). You can help her by encouraging her to track her money – what’s coming in and what’s going out. The value of her knowing where her money is going each month is one of the biggest gifts you can give her. She will learn very quickly to live within her means. And you both can help her with clarifying her short and long term goals and creating a savings plan to achieve these.
Your daughter has the opportunity this year not only to make some money and decide on a career path, but to create lifelong money management habits that will set her apart from her peers. Kids who learn to manage their money well won’t need the financial support of the bank of Mom and Dad later in life either.