I think one of the most important goals that today’s parents should set for themselves is to raise their children to be financially savvy and independent. I get to deal with too many young couples who aren’t and are drowning in debt as a result. With most families when their children reach their mid to late 20’s, they are earning income and making their own financial decisions, but they may still benefit from some gentle guidance as to budgeting and controlling debt levels.
Young people in their early to mid 20’s are challenged by the steep learning curve of all the ‘firsts’ they are experiencing, whether it’s their first full time job, first apartment, first car, etc. The pace does not slow down, as they may be saving for a wedding, or a house or all the expensed associated with starting a family.
On top of this period of rapid change are all the regular expenses from groceries to utilities. Plus they may have a student loan, a car loan or mortgage payments to make every month. In months when their income is less than their expenses, credit card balances and consumer debt may creep up. The sooner these young adults learn to start balancing income and expenses along with keeping debt to a minimum, the better position they will be for future financial success.
I advise parents to take the initiative: Young adults may be reluctant to start a discussion about finances with their parents, but grateful to discuss their concerns. Try opening the door with something like “We haven’t talked about money in a while, and we want you to know that you can come to us for advice whenever you need it.”
Then Listen Carefully: Your children may give you clues that their finances are becoming a struggle without coming right out and saying so. They might complain about their landlord being too tough on them, or may express anxiety about not getting a raise or bonus at work. These may be signs that you might want to probe to find out the financial stress behind these comments.
Be open with them: Tell them about some of your own challenges, both today and when you were their age, as it can help reassure them that you won’t be judgemental, as well as giving you a chance to share some of your own money saving tips.
Offer them objectivity: Acknowledge that you don’t have all the answers, and if appropriate suggest they make an appointment to meet with your advisor. Your advisor can provide expert advice, and your children may be more comfortable talking about their finances with a professional.
By raising the topic of finances, you can help your children who are young adults address small challenges before they become larger or insurmountable. This is just one more way to help set up your children for long term financial success.
There are a lot of resource materials out there, some easy reads are Preet Banerjee’s “Stop over thinking your money” and Rob Carrick’s “How not to move back in with your parents.” For any interested parents I have free copies of “Money & Youth” a guide to financial literacy for 16 to 24 year olds.