Many investors want to build a strong financial foundation that can be passed along to their children. However, today, there are many young adults graduating from university and are immediately faced with thousands of dollars in student loan and credit card debt. Even with financial support while in school, the cost of higher education is expensive and increasing, along with the cost of all other necessary goods. Here, we have summarized some simple steps from MFS for preparing the next generation with a strong financial foundation.

1. Get a Financial Education: Many students graduate with a bachelor’s degree with no real financial knowledge. It is important for students to practice financial management during the years in college and take a finance elective if possible. Parents should introduce their children to their financial advisor for honest advice and future engagement.

2. Follow the 50/30/20 Budget Rule: MFS advises that college grads should incorporate this simple formula: 50% of income goes to necessities, 30% goes to discretionary purchases and 20% is used to build a savings and/or pay off debt.

3. Shop around for a Bank Account: Consider the convenient way you and/or your child bank. Do you write a lot of checks, pay bills online or prefer a bank with a high-yield savings account? Weigh the options and make the appropriate banking choice based off the lowest cost for the unique way you do business.

4. Keep an eye on Expenses: One of the best ways to keep an eye on spending is to save receipts. Total them up at the end of the week, and make note of where the money is going.

5. Use Credit Cards wisely: Understand how credit cards work and the impact of  interest rates – debt can quickly build up to become overwhelming. Bills should be paid on time. A history of paying bills on time builds a good credit his­tory, which helps for big purchases down the road.