retirement

Let's Teach This in Today's Home Ec Class

The old-school class of yesterday has morphed into something broader, including personal finance. Here's a taste of what I’d include in that curriculum for high school and college students today.

The phrase “home economics,” or “home ec,” is almost synonymous with the 1960s, sewing machines and casserole dishes. Even though the premise of the course was to teach life and traditional home management skills, it didn’t serve up a recipe for protecting your finances.

Today, those home economics courses have shifted into a more life skills-based course, “Family and Consumer Sciences,” aimed to educate students about healthy relationships, work-life balance, sustainable eating and personal finance. As I watch my children grow up and face financial situations that seem to fall under the “adulting” category, I consider what types of skills and perspectives they may need to establish a protection-first financial plan of their own.

If I had a hand in shaping some of the financial acumen for high school and college students today — no oven mitts required — I’d address the following:

Establishing a budget

Understanding the flow of cash and the importance of saving and spending within your means seems simple, but putting it into practice can be tricky in the beginning. By helping your teen or young adult outline their income (allowance, part-time job, birthday and graduations checks, etc.) alongside their expenses and spending habits (gas money, eating out with friends, clothing, etc.) and a savings goal (class trip, college, spring break, etc.), you can help them develop the mindset to think about the financial requirements to live within their current means and the consequences of not planning ahead.

Often, students will work a summer job or internship and spend their paychecks during the summer, leaving little to no funds left over for the next semester. This can lead to some tough conversations and situations — but walking them through what percentage of their paycheck they can spend during the summer and setting up a budget can help prevent the back-to-school panic.

Understanding costs and using digital tools

Today, it’s easy to swipe a credit card or pay someone by Venmo, which also makes it easy to lose track of money. By leveraging budgeting tools and your bank’s financial apps, you can get into the habit of reviewing purchases and spotting trends in spending — and noting how that impacts your budget.

For young adults and students, online financial tools are an intuitive way to establish a routine to monitor spending/saving and potential credit card fraud, and to automate some of the budget process. Digital tools can also help manage credit scores, deposit checks, set up automatic transfers from checking to savings, and start to paint the full picture of their nascent financial portfolio.

Building and managing credit

There’s a fine line between using credit cards for “good” — building credit, earning points — and establishing a habit of using credit to purchase things you can’t afford. It’s important to avoid establishing a habit of credit card use for large or lofty purchases, as it can make it difficult to form a healthy financial foundation and can leave a lasting impact on a person’s financial situation.

Finding a student or “starter” credit card — one with a low credit limit ($500-$1,000) — for your kid is a good way to ease them into the credit world and demonstrate that credit cards are for convenience — not to purchase things they can’t afford. Maybe they use the card once a month to fill up the gas tank or grab something at the grocery store, and set a monthly reminder on their calendars or phones to pay off the balance. It also provides piece of mind for a parent knowing if something unexpected happens, say the need for an emergency airline ticket, funds would be immediately available.

Helping your child understand how to build and maintain their credit score can impact many aspects of their financial lives, including student loans, apartment or car leases and, eventually, buying a home. It’s a step toward establishing a protection-first mindset for their financial plan, even if they don’t fully realize it just yet.

Taking ownership

While your kids may know how to do their own laundry and drive a car, they may still rely on you to help keep them organized. Whether it’s depositing a birthday check or scheduling a doctor’s appointment or haircut, it’s important to have them understand ownership in making and keeping track of their own wellness, financial or otherwise.

This will empower them to connect the dots between their lifestyle and their finances — and the sooner they’re able to embrace this, the more prepared for the future they’ll be when it comes time for “adulting.”

About the Author

Brian G. Madgett, CLU®, ChFC®

Head of Consumer Education, New York Life

Brian G. Madgett, CLU®, ChFC®, is Head of Consumer Education at New York Life. In this role, Brian helps families across the country learn how to build better futures, rooted in a protection-first financial plan, for themselves and those they love. Brian began his nearly 30-year career as a New York Life financial specialist and has since held several leadership roles within the company. He earned his Bachelor of Science degree from John Jay College.

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