5 financial tips for high school graduates

Graduating high school is an exciting and special moment, but comes with many changes, some of them financial. Whether you have a summer job, are looking at going into a trade right out of high school or are spending the summer getting ready for college, this summer is a great time to think about your finances, start learning about budgeting and set financial goals for your future. Here are five financial tips to help you transition from a financially savvy teen to a financially savvy adult.

Open a savings account

It is never too early or too late to open a savings account. Even if you already have one, it is always a good idea to do research on rates and see if there is an account where you can earn more on your savings, especially if you are going to have a steadier income coming in compared to what you had in high school.

If you are 18+, you will no longer have to have your parent as a joint owner of your account. While there are many different savings accounts, a high-yield savings account offers a higher interest rate than a standard savings account. Opening a high-yield savings account to deposit your graduation gifts or part of your weekly income from a summer job is a great way to start growing your savings right out of high school.

Establish a budget

As a recent high school graduate, you may not have many expenses—yet. Learning to budget effectively is a beneficial tool that can set you up for future financial success. The key to setting up a realistic budget is to set aside time to outline your current income, bills and average spending. Even if you are not making a lot of money, starting a budget and getting in the habit of following one will help you immensely in the future.

One budget tactic is the 50/30/20 budget, where 50% of your income goes towards necessities, 30% goes towards wants or “fun” expenses and 20% goes towards savings. By starting a budget like this, you will get used to consistently putting a lot of your income away every month.

Set financial goals

Whether you're saving up for college, a new car or to move out, financial goals can help keep you in check. By setting both short- and long-term goals, you can attack your larger goals with more attainable increments.

For example, say you want to move out by the end of the year and need to save up enough to pay for both the first and last months' rent. Break down the cost into a monthly savings goal and challenge yourself to put away X amount each month. If you are already in the process of building a budget, be sure to include that savings goal in it.

Start building credit

Having a good credit score can set you up for success in the future, such as when you need to apply for a car loan or a mortgage. If you are 18+, this might be a good time to look at getting your own credit card to start building credit. Before applying for a credit card, do your research on the different cards on the market, comparing fees, benefits and interest rates.

Having a credit card can be a huge responsibility, and it's easy to fall into the habit of using your card for everything and anything. While it's important to use a credit card to build credit, it is also essential to keep an eye on that spending so that once the bill comes at the end of the month, you can pay it off in full. It is very easy to fall into the trap of spending more than you bring in. To establish good credit or improve your score, a good rule of thumb is to keep your spending low – between 10% and 30% of your credit limit.

If you want to slowly start using a credit card but are nervous about overspending, start by only using it for specific things, such as gas or groceries. This will help you learn how to incorporate a credit card into your day-to-day life without becoming dependent on it. For other purchases, use a debit card or cash.

Start an emergency fund

You might think: "I'm just a high school graduate; I'm young! I don't need an emergency fund." Actually, this is the best time to set one up. By starting an emergency fund and contributing to it early, you will be ready for unexpected costs when they happen. You can use an emergency fund for anything unexpected, such as your car breaking down, medical bills or a lost job. If anything unfortunate does happen, you will thank your younger self for putting that money away instead of having to utilize credit cards or take out a loan to cover the costs.

To build an emergency fund, put away a small amount of money each month or each paycheck. It doesn't have to be a lot, and you can increase that contribution as you make more money. Keep that money in a separate account and only touch it when needed. A safe place to put an emergency fund is a high-yield savings account. So not only will that money be put away, but it will also earn interest each month.

Finances can feel tricky, especially if you are coming out of high school and used to your parents helping. But by taking small steps such as creating a budget or opening a savings account, you will become more confident in yourself and how you save. Take it one day at a time, save the money you can and congratulations on graduating!

Discover more tips from Alliant:

• Four ways to financially prepare for college
• How to use community college as a stepping stone by Suze Orman
• 3 ways teens can save money this summer