• Theresa Gray

Learn how to improve a graduate's life

How many graduation parties have you been invited to this year? If you're struggling to decide what to gift your graduate friend, your problems are solved!

Don't give a boring Cross pen set or a clunky leather briefcase. They already know all the places that they will go (because they've been given that book in kindergarten)! How about giving them their own brand new credit card? Something flashy with their picture on it, that lets them shop 'till they drop? Just kidding! Here’s how I feel about credit cards!

Don't give them a credit card which could cripple them financially for life - instead, you can help them become financially fit. Unless your graduate is one of the lucky few to have taken a personal finance class in school it's very likely that they will go out into the world and not know anything about saving for retirement, budgeting, or responsible spending. In fact, one of the first things that is a danger for new high school graduates is when they walk onto a college campus and are offered credit cards. And, they will be given free stuff to sign up!

My friend Noel Fike teaches hundreds of kids financial literacy at Rockford High School, in Michigan. He recently said, “This is my fifth year teaching Dave Ramsey's "Foundations in Personal Finance" course to seniors. The course provides valuable information on staying out of debt, saving and investing, insurance, and much more. I was a Financial Advisor for 10 years prior to becoming a teacher and I can say without a doubt that students who take this course are way ahead of the learning curve when it comes to managing money."

Those are some lucky kids! Can you imagine how your life would be different if you had started saving some money when you were young? You could have paid cash for your first house, or been on track to retire at age 55!

So this is a chance for you to tell your story to a graduate (no worries, they’re a captive audience because they want your present) and change their life trajectory.

Here is the graduation present:


Give your graduate friend these 4 things:


1) The book, "The Total Money Makeover" by Dave Ramsey

2) Cash

3) This form (Print it out and write a note in the space on the side)

4) Your honest story about a dumb mistake you made and encouragement for them to stay out of debt

The thing with money and kids is that adults aren't often very honest about their own financial mistakes.

If you take your graduate aside to give him his present and show them what compound interest can do for them and why it matters they might be interested. Maybe they will even remember it the next day.

But if you want to really make an impact on someone, make it real for them. Share your struggles and be honest about the dumb mistakes that you've made with money. Explain why you wish you had started caring about staying away from debt and taking advantage of compound interest for savings, big purchases, or retirement at a younger age.

You can easily estimate your own compound interest results by using a shortcut called the Rule of 72. Your money roughly doubles every period of X years based on a formula: 72 divided by the interest percentage = X. For example if you get 8% interest and you keep the money invested it will double in nine years because 72÷8=9.

Point out to them how important it is to start early and how getting a good interest rate is crucial to any good growth rate. A bank savings account interest is 1% at best - and not going to cut it! That would take 72 years to double in value!

Encourage them that debt is not going to help them succeed and point out interest rates on credit card payments and how paying minimum payments can snowball into high debt that gets harder and harder to pay off.

Happy gift giving and happy graduation!

#budget #commonsense #creditcards #interest

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