Many recent college grads might not know all the basics of managing their money. In fact, just one third of states require students to take a personal finance class before they graduate high school.1 This can make it even more important for parents to continue that education, but many parents don’t go beyond short-term savings and budgeting.2
Having a game plan in mind can make it easier to provide more financial education. Consider using these three strategies to help your adult children reach financial independence.
Being a good financial role model is one of the best ways you can guide children toward independence. When you demonstrate smart practices like budgeting, understanding priorities and planning for long-term goals, the better equipped your child will be to make the same smart decisions later on. You could give your child a close look at your short- and long-term budgets by walking through expenses and bills, as well as your discretionary spending. It’s also a good idea to discuss saving money and planning for the future, and encourage children to start saving small amounts now to build up good habits.
Many adult children spend at least some time living in their family home. According to one study, 87 percent of parents with children 18 and older had a child live with them for a period of time.3 Opening up your home again can help adult children save for their own independence, but it doesn’t have to be a free ride. Use it to provide a lesson in financial management. Consider charging rent and/or a portion of the utilities. A relatively low bill will help your child get used to budgeting for regular expenses, while still spending less than they would on their own.
If you want to do more than model smart behavior, consider financial or career counseling for your child. You can also ask your financial professional if they are willing to provide some basic financial guidance. Many are more than willing to work with family members, and these conversations may help with continuity of your family’s estate planning. Even if your children don’t need professional guidance immediately, knowing they have someone to turn to in the future can help them feel financially secure.
It can benefit your child to have financial conversations early and often. Consider this: You’ve been honing your financial skills for years, and now you can give your child a head start by passing on your knowledge. The more education you can provide, the more confidence your child will have to secure their own financial independence.
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