Congratulations!  You’ve finally made it!  Another graduation season is wrapping up.  You’ve listened to an inspiring valedictorian speech, the caps have been tossed, and you’ve partied all night at prom.  Perhaps you’ve lined up a lucrative summer job and have been accepted at your chosen post-secondary educational institution.  There are exciting days ahead.

Related: The plight of generation Y

At 18 you are legally an adult in most provinces, with all the responsibilities that entails.

Take some time away from your summer activities to sort your finances.  Here are some tips to get you off to a good start.

Spend your graduation cash wisely

By all means, celebrate your achievements.  Allow a little splurge, but don’t blow it all.  Whether it’s a $100 cheque from Grandma or a portion of an inheritance, put that money to good use.

A U.S. study showed that the majority of graduating students used this money for college expenses or to boost their savings.

File a tax return

Even if your income for the year will be low, you should file a tax return in order to claim refundable tax credits, such as the GST credit.  You will also accumulate RRSP contribution room, which you can then use for a big tax deduction in the future.

If your earnings are below $25,000 you can use software like TurboTax for free to file your return.

Start a savings habit

Once you start working you need to constantly fight the temptation to spend every dollar you have access to.  It’s the perfect time to start saving for future goals.

Related: The beginner’s guide on how NOT to start investing

Start saving consistently with an automatic deduction plan.  Aim for 10% or more.  If that’s not affordable, you’re spending too much.  You may think you don’t have enough “extra” money yet, but if you are still living at home your expenses will be minimal.

Open an RRSP or TFSA, or both.  Take advantage of the twin forces of time and compounding that are on your side if you begin early.  You’ll become a savings superstar.

Don’t fall into bad money habits

Repeatedly wasting money on happy hours, concert tickets, clothes and fast food will eat into your earnings and cost you big time.  It’s not too soon to work out a budget and get clear on your goals.

Financially successful people live below their means.

Avoid credit card debt

High school graduates do not need a credit card.  You may start to get inundated with credit card offers.  They may have bonuses and gifts attached.  You may even get a card with your name on it and all you have to do is activate it.  Do not fall for this!

The temptation is great, but don’t fall into the trap of spending dollars you haven’t earned yet.  Once you start it can be hard to stop.

Final thoughts for parents

Your youngster has graduated from high school with all the required core courses, but they also need to learn good money management.

Editor’s note: Parents and students, this is a must read for new graduates – More Money for Beer and Textbooks – written by Kyle Prevost and Justin Bouchard from My University Money.

There can be a jarring lack of parental control when your high school graduate comes into some cash.  If you have a young grad in your life, share some of your best and worst financial moves.  Knowledge is based on a lifetime of experiences, something most high school students lack.

Related: Bailing out your adult children

The financial habits begun today will serve a young grad their entire lifetime.


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