One thing they don’t teach you in school is how to manage money. Now that you’re in your teens, you’re beginning to have a more independent relationship with money. You’re transitioning from an allowance or handouts from parents to earning your own money with part-time jobs after school, or even from your own business endeavors.

So, what do you do with this money to make it work for you and last longer? Now is the best time to figure this out – before you’re out there on your own. Before you head off to college, or into the working world, make sure you learn the following lessons:

It’s never too early to plan: If you think your parents don’t have a handle on this – or you need some guidance yourself – suggest that your parents bring in an expert such as a Certified Financial Planner™ professional. It’s never too early to deliver the message that how you manage your money as a teen – particularly on your own in college -- will set the stage for how well you manage it in adulthood.

A planner can help you focus on spending and debt issues in college, but it also makes sense to discuss how you will save for a car and, eventually, a home. That might force some smart spending, saving and investing decisions while you’re still in school.  Once you get the message, you’re in the game!

Focus on credit:  It’s one thing for you to use your parents’ credit card while you’re still living at home. It’s quite another when you get your first taste of freedom hundreds of miles away, often without your parents’ knowledge. Parents should opt to co-sign your credit card but keep it in your name. That way, parents will know when you make a financial misstep (and this probably will happen), which will be a strong incentive for you to keep your credit rating clean for the next four years.

Most important: Parents who are co-signed on your credit account can make sure you don’t sign up for any additional credit cards on campus where you’ll certainly be bombarded with offers.

Bank smart: You’re new at this, so you need to get some familiarity with the banking system before you head to college. You should set up a checking account on campus, but talk to your banker about debit options and fees, particularly for overdrafts, which are sky-high at many banks now.  Also ask your banker about direct-deposit options if your parents are planning to deposit money from home for your tuition or agreed-to spending needs.
 
Set up your first emergency fund: As a young person entering independence, you should get used to the idea of savings and reserves for unforeseen events such as emergency trips home or related expenses. To be sure: late-night pizza is not an emergency!

Put yourself in charge of maintaining your financial aid: Each year, the FAFSA (Free Application for Federal Financial Aid) is due in June. State applications are due earlier. While parents need to run the financial aid process, you need to be equally aware of how your education is paid. Everyone should file the form whether or not you think you may be eligible, and you (with your parents) should be searching for scholarships at all times. By the way, legitimate
scholarships never charge fees and are typically open to all applicants for consideration.  It might also make sense to meet your parents’ tax preparer to make sure you’re taking advantage of any income tax opportunities.  
 
Make a budget and stick to it: If you’re leaving for college with a computer, consider getting personal finance software to track your everyday expenses. Many computers come with such software already ‘bundled.’ And make sure the computer has a security password.

If you don’t have a computer, keeping track of spending by calculator is fine, too. Either way, you need to work with your parents to determine necessary realities about everyday expenses, tuition and financial aid. Then, when you come home at Thanksgiving, you can sit down with your parents and review those figures and make reasonable adjustments. You obviously want your parents to trust you with money, so you might want to do this for as long as it takes to develop solid and consistent money habits.

Schedule a holiday budget and credit check: When you return home for the holidays, with a successful semester of college under your belt, schedule some R&R, home cooking and the first reading ever of your fall budget figures and your first credit reports. Sounds like a wild time, huh? Well, it’s a good idea just so you can see (and show) how you’re doing financially.

Since credit reports can be ordered online, you and your parents should sit down with each of your three credit reports from Experian, TransUnion and Equifax and review them for activity and errors. Since everyone is entitled to one free credit report from each of the agencies each year, go to www.annualcreditreport.com  for yours. 

Open your first IRA:  Once you’re 18 years old (or older) and earning wages by working part-time at school, at home during breaks, or for your parents, ask your parents to help you open a Roth IRA in a growth fund. Understand this is essential to your future savings, so don’t cash it in. Have your parents ask their planner about this.

Consider identity theft. Personal financial data left on laptop computers, cell phones and other electronic devices can be readily stolen on campus or in a dorm or roommate environment. Keep all paper records in a safe place and introduce passwords to keep all your digital information safe. This is a good habit that will save you many times now and in the future.

Get networking: Internships and jobs in your chosen field during summer breaks can give you a great head start on your career path. Take the time to research these opportunities during your freshman year so you’ll be in the front of the line when it’s time to apply for that awesome job later.

Handle mistakes carefully: Most kids will make money mistakes in college. If you overdraw a checking account or overdo it with their credit card, take the parental criticism constructively and come up with a corrective plan you’ll work on together.

This article is produced by the Financial Planning Association, the membership organization for the financial planning community. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal tax or legal counsel.”