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Graduates need Cash “FLO” to survive

By Michael D. Wynn, CFE
Special to The Michigan Citizen

An “Open House” could provide Cash “FLO” (Cash and Financial Literacy Ownership) for a young person who will soon take their first step into adulthood with financial responsibilities.

During the summer months, many of us will give a Graduate, a “Graduation Party”, or “Open House” more commonly called. This unique gathering could be more than just a celebration of food, fun and money. Your Graduate who will probably attend college away, or stay home to start a career, needs direction and advice about financial literacy more that ever, although the greenbacks would be nice too.

Currently, our educational system at the national, state and local levels does not provide enough financial literacy. Teachers are not trained in personal finance. In most cases, teachers become certified to teach standard subjects, like history, math and reading.

According to a national study on personal finance taken in 2003, of 1,500 high school seniors in 65 high schools across the United States, only one out of ten students passed a basic money management test. However, we must be concerned with the lack of understanding that high school seniors and young adults will take into “Big World” without any idea of personal finance.

Another poll taken in 2006, where a comprehensive written survey of 5775 high school students in 37 states that measured 12th graders’ level of knowledge of personal finance basics, also resulted in a failing grade of 52% indicating the growing need for financial education (To see the actual test questions go to

This compounding problem in a 2006 survey show financial literacy scores for white students with an average of 55 percent, while African Americans scored significantly lower at 44.7 percent; and Hispanics, at 46.8 percent.

Despite the new attention on the lack of financial literacy in the education system, the problem is not going to be resolved any time soon. However, as a motivator, I know we can make a difference by preparing them for the future.

Remember “it’s takes a village”; therefore, we must place special attention on our young people by setting an example through your own behaviors, advice and teaching financial lessons.

This means as parents, grandparents, uncles, and aunts and even close friends, we must close the gap by teaching our children how to take ownership and to have respect for their personal finances. We should feel obligated to ask them about their future plans and how they will become financially fit.

This “New Movement” toward personal-finance education comes at a time when the world is faced with more financial problems that has gotten more complicated. With raising gasoline prices, the cost of food and college tuition skyrocketing, higher credit card fees, and the cost to live in a home, young adults, for the most part, are very confused as ever about money matters.

So, here are some of the ideas that you can use to put your Graduate or child on the right path to financial success:

-Plan a monthly budget: Every two weeks or each month, all receipts from all purchases should be recorded. They should closely monitor spending from the receipts to determine how much money was spent. They should arrange there spending into categories like food, snacks, supplies, clothing and activities, and continue to monitor them for each month to see how the budget and spending compares.

– Pay yourself first/Save for the future: If they must get a job; then only a few hours should be worked that will not interfere with schoolwork. Money management and budgeting works together and goals should be considered. They should deposit a portion of their check into savings account every time they receive a paycheck. About 5-10 percent should be put away before they decide to spend. It adds up. Saving before you spend is one of the most important money habits that a person can develop. They must also understand the income tax responsibilities and issues relating to employee and independent contractors. A good Income Tax Accountant will provide a clear understanding. Timely and proper income tax filing is must to keep a good reputation with “Uncle Sam”.

– Balancing the checkbook: They must focus on how much money they have at all times so they are not overspending. They should balance the checkbook every month. However, they should not forget about the outstanding debit or ATM charges between statements. Balancing the checkbook will enhance their discipline for future financial endeavors.

– Commit to comparison-shopping: Buy in bulk with friends. Groceries, personal necessities and school supplies including used books could all be purchased at great bargains.

– Use Debit and Credit cards with extreme Caution (emergency): Credit and debit cards create the illusion of buying power they probably won’t have. They should understand that one out of three high school seniors’ uses credit cards, and half of those have cards in their own names, according to a survey. About 75% of college students have credit cards, with a balance of $3,200. However, one out of 10 college students carries a balance of more than $7,800. Use credit wisely, one debit or credit card will be adequate even with a balance limit not to exceed $500.00.

– Avoid excess spending: They should understand that they are targets for advertisements. Don’t buy into advertisements that will promise you the “Bomb Makeover” or “Fresh” outfit just in time for the party or the game. Many of these Advertisers can’t wait to separate them from their money.

– Paying monthly bills on time: They need to know how to keep a good credit history early in life in order to play the game. They should pay their bills on time, including student loans because a bad credit history will prevent them from getting their future dream house or dream car.

– Timely review of credit card statements: Once a month, they should review all credit charges posted on the statement, noting any unusual or duplicated charges. They should also note all payments and credit adjustments. The bottom-line credit card statements should be reviewed timely.

– Avoid identity theft and beware of scams: Identity Theft dubbed by the FBI as the “crime of the century” refers to all types of crime in which someone wrongfully obtains and uses another person’s personal data in some way that involves fraud or deception, typically for economic gain. The Federal Trade Commission (FTC) estimates that roughly 10 million Americans have their identity stolen or misused every year costing consumers $5 billion and businesses $48 billion annually.

– Student and young adults are the biggest targets of Identity Theft and scams because of the busy schedule and extended use of laptop computers and other unsure technology, Beware.

“You cannot tailor-make the situation in life, but you can tailor-make the attitude to fit those situations. —Louis L. Mann

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