Chicago Tribune (Sunday)

Important money lessons for new college graduates

- DREAMSTIME Steve Rosen Kids & Money

My biggest financial blunder more than 40 years ago still haunts me today.

Fresh out of college, I stumbled right out of the gate with poor money management decisions. First, I failed to take advantage of a financiall­y friendly stock purchase plan offered by my new employer. What a mistake since the stock was offered to employees at a 15% discount from the market price.

I left some profits on the table.

I then compounded that misstep by setting very little aside from my paycheck for emergency savings. I was living paycheck to paycheck — or at least it felt that way in my then 22-year-old mind.

Chalk it up largely to not having much of an understand­ing about the stock market, no rough idea how to budget since I had never tried, and not having any financial goals other than to build up my record collection with monthly purchases of vinyl. My priorities were out of whack.

I mention this now because finances are going to be a bigger factor than ever before in your child’s life if they’ve just graduated from college, are living independen­tly and just beginning full-time work. Poor saving and spending habits early on can haunt you later when trying to buy a car, get approval on a home loan or when merging your finances with a significan­t other.

Parents, what can you do to help ease your child’s transition?

I’ll start with what you shouldn’t do: Don’t continue to provide financial support and monthly bailouts when your new grad runs short. You should be weaning him or her off the family payroll by handing over responsibi­lity for student loan payments, car insurance and the like.

If all that’s too much at once, start building toward that goal.

Another idea: Pay for several hours of time for your new grad to meet with a financial planner. Rather than inserting yourself into the middle of those conversati­ons, turn it over to a profession­al to discuss budgeting, selecting an appropriat­e credit card, understand­ing the ins and outs of the employer’s workplace retirement and benefit plan, and everything else that will help build a solid credit history starting at the get-go.

I’ve said this before, but it could be the best $200 you’ve ever spent on your son or daughter.

At the very least, they’ll have a better understand­ing of the difference on their paycheck between gross income and net income.

Seriously, over the years, I’ve had more than one parent tell me their child was greatly disappoint­ed when their first paycheck was smaller than anticipate­d because of a thing called taxes.

If paying for profession­al help is not feasible, help guide your child through the often confusing employee benefits package. Does your 20somethin­g need life insurance beyond the minimum amount covered by the employer? How does a health savings account work? How much could be socked away every month in the 401(k) retirement plan?

I didn’t have the “money talk” with my parents, so I learned through hard knocks. It took me three years before I finally invested in the company stock purchase plan.

I was also schooled in one other way: It’s better to make mistakes when the financial stakes aren’t mammoth and there’s plenty of time to recuperate.

Questions, comments, column ideas? Send an email to sbrosen103­

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