Have a child who’s graduating from college? Your son or daughter isn’t the only one moving on to a new stage in life. You’ve also advanced, from being the parent of a student to being the parent of an independent adult.

So what are your new responsibilities? What kind of financial advice should you give your graduates as they land their first job? What kind of help — if any — should you extend to them as they leave the nest?

To get answers, the Straight Talk blog reached out to Zac Bissonnette, author of the new book, How to Be Richer, Smarter, and Better Looking Than Your Parents. Here’s what Bissonnette recommends:


Sure, any parent can urge their kids to save money. The trick is teaching them how.

“A method people can easily follow is a set-it-and-forget-it budget,” says Bissonnette, an associate producer at CNBC. This means you show your kids how to set up automatic transfers each month from their savings to their 401(k)s, IRAs, emergency funds and so on.

And when it comes to cash outlay, they can also set up automatic transfers for monthly commitments, such as student loan payments. “Then they live on the rest no matter what,” says Bissonnette. “And they didn’t have to create a balanced spreadsheet — it just kind of did it itself.”

Retirement Funds:

If your children land jobs that offer 401(k) programs, You should tell your kids to max out their 401(k)s to the employer match,” Bissonnette says. Otherwise, Bissonnette recommends a SEP IRA for most people.

Credit Cards:

“A young person who needs to live within their means, and is trying to pay off their student loans, really shouldn’t be using a credit card,” Bissonnette says. “They’re much better off with a debit card. People spend dramatically more money with a credit card than a debit card and even more with a rewards card than a traditional credit card — there are studies from the Federal Reserve Bank of Chicago on that. If you are going to use a credit card to build your credit because, say, you want to buy a house, you can do it with a secured card or a very low limit card.”

Student Loans:

Giving advice can be priceless. But sometimes giving financial help is even better.

“When you look at the correlation between money and happiness, the fewer monthly payments you have and the lower they are, the happier you’re going to be,” Bissonnette says. “If your kid has student loans — especially private student loans — they’re kind of a ticking time bomb.” For those parents who can afford it, he recommends lending a hand to help their kids pay down their student loan debts quickly.

A Used Car:

If you were able to help your graduate out with college loans and still have change to spare, Bissonnette recommends making another investment — on a used car. “You can set your kid up for a lifetime without car payments,” Bissonnette says. If you buy your child a used car, “He can drive it for a few years. And instead of making payments on that car, he can put money in a savings account and then use that money to buy a slightly better car in four or five years. And then buy a better car later.”

And, adds Bissonnette, no need to fret that the car’s not brand new. “It used to be that buying an older car for a few thousand dollars was not a very good idea — that you would get a lot of problems,” he says. “But over the past decade or so, the reliability and safety on older cars has just gone through the roof.”

How do you think a parent should prepare their children for life after college? What’s the most important savings advice to give them?