Best Gift for Your New Graduate

It is that time of year again. Another group of young people are about to graduate and enter the adult world. Is your graduate ready? The financial picture for your graduate to be is not a rosy one. According to the report,Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances, "the second largest use of installment borrowing is for education-related expenses." According to Comments of the National Consumer Law Center, et al, Regarding Advance Notice of Proposed Rulemaking Review of the Open-End (Revolving) Credit Rules of Regulation Z, "The average credit card debt among young adults increased by 55% between 1992 and 2001 to $4,088 dollars." It further states that, "among...young households with incomes below $50,000, nearly one in five with credit card debt is in debt hardship - spending over 40% of their income servicing debt (including mortgages and student loans). How many parents do you know whose fledgling flew the nest, only to return broke and in debt? How many households now support three generations?

In the old days...you know, when your parents had to walk 10 miles to school, in snow, uphill-both ways...young people were more knowledgeable about what it took to be self-sufficient and address their everyday needs, because they learned lifeskills. What are life skills? Cooking, cleaning, washing, car repair, childcare and money management are a few. Over the years, many young people have become distanced from lifeskills, because of lifestyle changes and the fact that home economics and auto shop have fallen away from the school curriculum. They are distanced to the point that they are clueless, when they are finally on their own.

The key reasons young people, especially recent graduates, end up back at home with mom and dad revolve around money. Everything costs-food, clothing, medication, health care, transportation, housing, insurance. Young people's failure to understand and employ thriftiness, and the concept of doing for oneself rather than paying others, drains their finances and often lands them in debt or bankruptcy. According to Comments of the National Consumer Law Center, et al, Regarding Advance Notice of Proposed Rulemaking Review of the Open-End (Revolving) Credit Rules of Regulation Z,bankruptcy filings have increased dramatically since 1968 from 189,627 in that year to 1,624,272 in 2004. The regular mail visits from all those enticing credit card offers don't help.

As a parent, what can one do? The greatest graduation gift any parent can give their graduate is a bit of time and a ton of knowledge about day-to-day life and making ends meet. Invest some time in your soon to be graduate and discuss lifeskills, money and the implications associated with the lack thereof. Specific topics for this discussion should include:

· How to write a check and balance a checkbook. (Explain that a debit card charge is like a check).

· How to properly manage a credit card, or "just say no to credit cards," except for emergencies (which is not Friday night pizza or that cool pair of shoes).

· How to shop for groceries (take them with you at least once and show them that a can of soup and a box of crackers is a better investment than a burger and fries).

· How to do the laundry; show them; let them do a few loads. (You don't want them bringing that back home and clothing replacement is costly.)

· How to cook basic items like spaghetti pasta, an omelet, a casserole. (Instant oriental noodles are not healthy as a steady diet and eating out is expensive.)

· How to do basic house cleaning, washing dishes, cleaning the bathroom, vacuuming. (Clean means healthier, healthier means fewer medical costs.)

If you don't feel confident enough to have these conversations with your graduate to be, find someone who is. Look to relatives, friends or youth organizations for resources. Heck, you can take them to the bank and one of the bank associates can show them how to write a check. Let the bank associate explain checking accounts, savings accounts, OVERDRAFT fees!

If you know for sure that your graduate is already expert at all these things, then you can probably take a deep breath and hope for the best. If not, you cannot afford to assume your graduate knows any of these things. Watching someone do something or simply being aware that someone is doing something does not equal education or know how.

We love our children. We want them to be happy, successful. We have taken good care of them. But have we provided them with the tools they need to make success happen? Have we insulated them from the facts of daily life too much? Have we "shot ourselves in the foot"?

Before you think for one single minute about buying your graduate a car or a fancy cell phone or whatever high dollar item you've been entertaining, give them the gift of your knowledge. Then you can look at other gifts. But a word of caution, you may want to consider some practical items rather than just flashy ones. Do they have towels, sheets, a pot to cook in? Maybe a gift card for the local grocery store is in order. For some ideas about practical gift packages read the article Practical Graduation Gifts, here at Associated Content. You may want to direct your new graduate to the article, Applying for Your First Job: Application Tips and Common Interview Questions, so they have a better shot a job. And do take a look at buying the reference book, How To Survive Life On Your Own, a graduate's guide to success. It will help reinforce what you have shared and offer up easy access to what they may forget. It is now in second edition with the first edition having a 5 star rating at Amazon. However, it is no longer available at Amazon and is only available at the website in the references below (greatestgradgiftever.com).

Best wishes to you and your graduate. Prepare them as best you can, tell them to call if they have questions, don't make it too easy for them to borrow money and only give them a prepaid cell phone, unless you want to pay that $500.00 cell phone bill. And...depending on your place in life, you may want to sell the house and move to Costa Rica.

References:

http://www.federalreserve.gov/pubs/oss/oss2/2004/scf2004home_modify.html

http://www.federalreserve.gov/pubs/oss/oss2/2001/bull0103.pdf