Anchor:  Project Economy News for you now, it is graduation time.

Anchor: It is, and money of course is the go-to gift for most people. So financial adviser Kurt Pearson is here. Thanks for being here, you have some do’s and don’ts for the graduates when it comes to those money gifts.

Kurt:   Yes, it’s always difficult to handle a bit of a windfall into a high school graduate especially as those gift roll in it looks like, “Wow, money is really stacking up…”

Anchor:  Pretty exciting.

Kurt:  Yeah. Typical advice of course is any time we’re heading in to a life transition we want to err on the side of liquidity. And so we want to keep a good solid chunk in cash reserves. Of course, for the high school graduate, and the parents that are involved it’s always a good time to evaluate how are we going to build autonomy in the graduate’s life? Autonomy in terms of how they relate to cash flow, and how they handle their cash flow, and what kind of income will it have? How are they going to handle debt, and how are they going to establish a credit rating? Those kinds of things are really important.

So having a little bit of cash on the sideline they can stay in an emergency type of reserve fund would be one of the better uses, I think, for those gifts that come rolling in.

Anchor:   And establishing things like a credit rating are very important to do at a young age and to keep up with it.

Kurt:   Yes, they really are. So debt isn’t bad. It’s – when it’s misused, that’s when it becomes a problem. And so it’s very important for parents to take a role but also to you know, hand out the responsibility to see that autonomy begin to build.

Now, for the college graduate, a little different, usually the gifts that are rolling in maybe aren’t as quite as significant but the college graduate has even more of a responsibility because they’re usually coming out of college maybe with a little bit of debt. They need to be getting their income cranked up, and getting into a job, and a career. So there’s a lot of important life lessons that have to be learned fairly quickly for those college graduates.

Anchor:  And those student loan bills start rolling in awfully quickly so….

Kurt:  Organizing that debt is —

Anchor:   It’s one of the hardest things to do; teach kids how to save money. Thank you very much, Kurt. If you have any questions for Kurt you can contact him at Compass Financial. The number there, 515- 327-1020.