Time flies! It’s hard to believe they’re all grown up and ready to head off to school or move into their own place. But before your kids leave the nest, make sure they’re prepared with a few financial tips that’ll really help them out in the long run.

Tip #1: start an emergency fund. 

This one’s non-negotiable: as soon as your kid starts earning, he or she should start saving up an emergency fund. Let them know that no one knows what the future holds, but one thing’s for certain: there will be ups and downs. The trick is to be prepared. The ‘downs’ could take the form of a lost job or an unexpected expense, but if your kids have money socked away, these bumps in the road are much easier to navigate. They should aim to save enough to cover all their living expenses for at least three months.

Tip #2: start saving for retirement now.

When you’re young, saving isn’t easy. If you’re kids are like most young people, they aren’t earning heaps of money at this stage in their life. And they likely have a busy social life with all the expenses that go along with it. But if they can start saving even a little every month, it can really make a difference in the long run. For one, it’s a great habit to develop. But also, there’s the magic of compound interest—essentially, they’ll be earning interest on interest, year after year.

Tip #3: stick to a budget.

Budgeting is very important, especially when your kids just leave the nest and don’t have a lot of money saved up. They should try to determine exactly how much money is coming in each month, and where that money is going. In general, they should try not to overextend themselves, splurge on things they don’t need or take on too much debt. If they can’t stick to a budget, you know what’ll happen—they’ll be coming to the ol’ bank of mom and dad for a little help.

Tip #4: pay your bills on-time.

Kid’s spend a lot of time thinking about their social reputation, but how much time do they think about their financial reputation? Before they move out, let them know how credit scores work. They’re basically the measure of one’s financial reputation based on their credit history. Essentially, if you have a good credit score, you may qualify for a lower rate for a loan or mortgage compared to someone with a poor credit score. One simple way to improve your credit score is simply by paying your bills on time.

Tip #5: plan for future expenses.

Your kids don’t need a crystal ball to anticipate some big-ticket expenses. We’re talking things like tuition costs, buying a car or even a home down the road. Like most things, the earlier they start saving, the easier it’ll be to afford these expenditures. Here’s one strategy you can suggest: help them figure out how much they’ll need to save each month, then they can set up automated monthly transfers to a separate savings account specifically earmarked for that expenditure.

Tip #6: pay off high-interest debt first.

This one’s a no brainer. If your kids have multiple debts—like student loans, a line of credit and a credit card. They should—always, always, always—pay down the debt with the highest interest rate first. Or better yet, consolidate all the debts in one place at a lower rate. We’d be happy to talk your kids through their options.

Tip #8: learn to invest or ask for help.

A savings account is great, but once your kids have a little money stowed away, it’s time to teach them about the basics of investing. GICs (Guaranteed Investment Certificates) are a great place to start because they’re completely risk-free and will earn them a better rate of return than a regular savings account. After that, you can get into Risk vs. Reward, Diversifying Your Investments and some of the other investment options available.

As always, we’re here to help! If you have any questions or just need a few pointers to get you moving in the right direction, we suggest you visit your local branch for a quick consultation.