Dear Carrie: My daughter just graduated from college. Although she took several economics classes, she really doesn’t have a clue about handling her own money. How can I help her start out on the right foot? — A Reader

Dear Reader: Congra-tulations to you and your daughter! College graduation is a real milestone, but you’re wise to realize that your daughter’s education isn’t quite complete. The unfortunate reality is that most young adults have received little instruction about personal finance at the moment they need it most: when entering the workforce and starting “real life.”

To help your daughter start out with confidence and avoid some very common mistakes, I’d begin with a few basics, both big-picture ideas and some very practical ones.

Live Within Your Means

This is the big one that everyone needs to follow. If you can impress on your daughter the importance of budgeting her money (including some for savings) and sticking with a lifestyle she can afford, you’ll be doing her a great service. It will keep her out of debt, help her build wealth for the future and — just as importantly — reduce her anxieties about money. An online monthly budget planner, such as the one at, can be a great starting point.

Plan for Retirement

Your daughter might think this is jumping the gun, but now is actually the ideal time for her to start saving for retirement. To catch her attention, tell her that if she can start putting away just 10 percent of her income toward this big goal now, she’ll probably never have to increase that percentage. If she’s at a job with a 401(k), at the very least she should contribute enough to get any company match. Otherwise, a Roth IRA is a smart move.

Prepare for the Unexpected

Urge your daughter to start creating an emergency fund to cover three to six months’ worth of basic living expenses in case of illness or unemployment. Even if she knows that she can count on you to be a safety net, having her own nest egg will give her a greater sense of independence.

Have Health Insurance

This is a must — even for the healthiest 20-something. A bad accident or an unforeseen illness could be ruinously expensive (for both you and her). If your daughter can get health insurance through work, perfect. If not, she should be able to stay on your policy as a dependent, provided she’s single and younger than 26. If she can’t be covered under your policy and doesn’t have a job that offers health care benefits, shop around and find a high-deductible policy. It should be relatively inexpensive for a healthy young person.

Start a Banking Relationship

Most college kids have checking accounts with ATM/debit cards attached, so they are familiar with how these work. If your daughter needs a new account, she should look for a no-fee or very low-fee account. Some of the online banks offer debit/ATM cards and charge no fees. Make sure she understands the rules about overdrafts, particularly the fees associated with them.

She should also get a credit card and begin building her credit history. Again, a no-fee, low-interest card is best — but urge her not to carry a balance unless absolutely necessary. Explain how quickly compound interest adds up. And make sure she reads the fine print to understand interest rates and penalties for late or missed payments. For an extra lesson, the cost-of-debt calculator at can be a real eye-opener.

Keep on Top of Student Loans

If your daughter has student loans, they can quickly get out of hand if not tackled right away. Help her find out the repayment process and when repayment should begin. As with credit card debt, she should never become delinquent on a payment. Check out for more information on how best to repay student loans, as well as loan forgiveness programs for certain types of work.

Learn About Investing

As your daughter starts to save part of her paycheck, help her become acquainted with the basics of investing: types of investments (stocks, bonds, mutual funds and exchange-traded funds), the concept of risk vs. reward, and the importance of diversification and asset allocation. To make these ideas real, you might help her select a couple of first investments (well-diversified mutual funds or ETFs, ideally), explaining how each can help her meet her goals. You could also have her meet with your own financial adviser to help her get started.

Take Control

Helping your daughter understand these necessities and the importance of financial responsibility will get her started on the right path. But also talk about your own money values. Share with her how you set your priorities and make financial decisions. Then let her take control. It’s up to her to live within her means, to save for her retirement and to make responsible choices. Of course, also let her know that you’ll always be there to help out with advice and know-how as she moves into this new and exciting time of life.

Carrie Schwab-Pomerantz, CERTIFIED FINANCIAL PLANNER ™ is president of the Charles Schwab Foundation and author of “It Pays to Talk.” You can e-mail Carrie at