The season for high school and college graduation parties has started. I love these events with young people celebrating their achievement and eager to start their next adventure (after some summer R & R).

Unfortunately, odds are that too many of these graduates haven’t been exposed to the fundamentals of personal finance. U.S. teenagers earned an average score in the recently published global financial literacy test. Some 22 percent of U.S. students taking the test didn’t reach the baseline level of proficiency in financial literacy, according to the Organization for Economic Cooperation and Development.

Personal finance matters. I have argued in past columns that the subject should be an integral part of the curriculum in high school and in college. After all, young graduates qualify for credit cards and auto loans. The merchants of debt are adept at promoting the convenience of credit while creative at hiding the true cost of borrowing.

Even more important, the changing nature of work calls for a firm grasp of personal finance. Young people are moving into a future defined by multiple jobs, fluid careers, on-demand tasks, learning new skills and working well past the normal retirement age. The notion of a job for life that provides retirement, health and other benefits reflects a different economy and workplace. In the new economy of flexible careers a savings cushion is critical and debt an impediment.

I think anyone who wants to help young graduates manage their money well should concentrate on a few good habits. “Doing well with money isn’t nearly as complicated as many believe,” Andrew Tobias wrote in “My Vast Fortune.” “Largely, it’s a matter of adopting good spending and savings habits.”

First, put away $10, $20, $50, $100 or $500 — whatever is comfortable — every month once you have a job. The savings strategy should be on autopilot, easy to set up with high-tech financial institutions. The savings eventually becomes both a downside safety net and an upside opportunity fund — two sides of the same finance coin.

Second, borrow conservatively and cautiously. Credit cards shouldn’t be used to spend more than you make. Pay off the bill monthly. Student loan debt should be kept to a minimum. Know your repayment options well before graduation. Don’t stretch to buy more home than you can afford. You want to manage your savings and debts to allow for flexibility in jobs, career and education. Freedom is a low overhead.


Chris Farrell is senior economics contributor, “Marketplace”, commentator, Minnesota Public Radio.