Ways to prepare your children for financial independence

Early Years: Talking about money can begin at an early age. It is never too soon to explain the concept of being patient before making a purchase or that saving money to meet a goal is just as important as short-term gratification from spending.

Grade School: Providing an allowance when chores are completed can reinforce the positive habit of setting money aside in savings. In addition, chores foster a positive work ethic and independence, helping kids to understand the value of their individual contribution.

Middle School: This is a time for emphasizing the importance of giving back through philanthropy. Middle school can be a challenging age for parents as children tend to be very self-centered. Helping them to focus periodically on the needs of those less fortunate can strengthen their understanding of the power of giving. Volunteering as a family and discussing where donations are sent and why establishes practices and behaviors that can continue into adulthood.

High School: This can be a very busy period with schoolwork, sports, extracurricular activities, and part-time employment. Inevitably, kids become more attune to how money is allocated to various activities, making it a great time for parents to reinforce lessons learned about saving and spending.

Banking and budgeting: While many kids today do their banking transactions online (bank apps and Venmo are favorites in our household), this should not preclude learning the basic concepts of how bank accounts operate, the importance of balancing a checking account, the use and implications of debit and credit cards, and how to budget. Budgeting can be achieved in many ways including written lists, spreadsheets, or using the myriad of budgeting apps currently available.

Investing: Key investment concepts are also important to emphasize during the high school years. Learning about investment types, asset allocation, and the capital markets will prepare young adults for the eventual management and administration of wealth.

College and Later: By their mid-20’s some young adults are ready to learn about the structure of their family’s estate and the plan for its disposition. We encourage parents to discuss this with their children periodically over time to ensure that your children understand your intentions surrounding the legacy you wish to leave behind. Once children are 18, parents lose access to their child’s financial and health care information, even though they may still require parental assistance. Shortly after your child’s 18th birthday, we suggest that they execute several documents including a HIPAA Release, Living Will, Health Care Proxy, and Durable Power of Attorney. These documents are tremendously helpful if financial or medical parental support is required for young adult children living away from home.