If your adult children are still entirely dependent on you, here’s what to do!
Say your adult child never left the nest, or maybe they moved back home for a while but have now gotten way too comfortable to leave. These scenarios are all too common nowadays. But according to experts, there are a few fool-proof steps you can take to help them gain the financial literacy and knowledge to move on successfully.
Watching your kids become more independent is always exciting. Yet, helping them prepare financially for adult life can be difficult. As the cost of living continues to rise, it’s increasingly common for children to live at home longer or return to the family home they grew up in.
Every household may feel this financial strain in a different way. But no matter your circumstances, take a look at these 10 tips if you’re a parent or caregiver helping your adult children take steps toward financial independence.
Just like in different phases of their younger lives, you can provide the support and compassion they need to be economically strong beyond your arms.
Begin with the basics of personal finance
One actionable strategy experts often recommend to parents and guardians is integrating financial education into everyday life. For example, sharing insights about tax planning, budgeting, and the importance of saving can open conversations that prepare adult children for financial autonomy.
This is the first step to take: educate them about the basics of personal finance. This includes investing, budgeting, saving, and the power of compounding interest. Basically, you can involve them in any household budgeting or set them up with a brokerage account to learn about investment strategies.
Incorporate financial literacy into daily rituals
Incorporating financial literacy into daily habits, promoting hands-on learning, and harnessing technology is key in empowering adult children to achieve and maintain financial freedom. These strategies provide them with the skills required and they instill a sense of confidence and responsibility on their financial journey.
Set responsibilities and financial boundaries
By this age, we should all know the importance of setting financial boundaries and responsibilities for adult children who are still living at home. This might include examples like managing a budget, contributing to household expenses, or saving a particular percentage of their income.
One great idea is to implement a “rent” system for your adult child, which can then be secretly saved and returned to them as seed money for their first home purchase. This approach teaches the child budget management and the value of money. And the added bonus is that they’ll be prepared for independent living expenses.
Foster independence using technology
Experts say that taking advantage of technology can be a big game-changer in fostering financial independence. According to a financial expert, encouraging the use of online resources or financial management apps can provide adult children with accessible tools to track their savings, spending, and investments.
Tech entrepreneurs emphasize the importance of embracing these platforms for improved financial literacy. By guiding them to set financial goals and monitor their progress digitally, they acquire valuable insights into the practical parts of managing finances in today’s digital age.
Set up a trust for them that fosters independence
Putting in place a trust set up, which experts often recommend to clients, can serve as a valuable educational tool for adult children. For instance, a trust can be structured to liberate funds based on specific achievements that promote responsibility.
This can include completing a college degree or securing full-time employment. This approach not only provides you with a safety net but it also encourages milestones towards more independence.
Have regular family financial meetings
One of the best strategies for parents to help their adult children gain financial independence and literacy concerns explicit family financial meetings, said an expert at BlueSky Wealth Advisors.
They’ve encouraged families to sit down together every once in a while to talk about savings, financial goals, investments, and even regular expenses.
This openness not only educates them but it also eases the financial planning process for adult children, making them more relaxed and informed when making their own decisions regarding finances.
Boost confidence with real-world economic exercises
When we’re talking about practical application, experts have seen a trend in the power of real-world financial exercises.
You may want to think helping your adult children with their process of creating and maintaining a budget or even involving them in your own financial planning talks to provide them with a hands-on learning experience.
This could potentially extend to tasks as complicated as evaluating family tax obligations or as simple as grocery shopping but staying within a budget. These experiences not only teach them practical skills but also build confidence in financial decision-making.
Have them meet and consult with a financial advisor
We recommend encouraging your adult children to speak with a financial advisor on their own, says a tax, trust, and estate lawyer at Brillant Law.
This step could clarify what financial planning means for them and it’ll also provide them with tailored advice that blends well with any existing family estate trusts or other plans. This type of strategy tends to promote a sense of ownership over their financial future, encouraging a more informed and proactive approach to personal finance.
Advice them to invest as early as they can
Encouraging and guiding adult children to invest early on in life, even in a small way, has been a cornerstone of a financial advisor’s suggestion to parents.
Taking advantage of tools like low-cost index funds and Roth IRAs can be a fantastic way for younger adults to see their money increase over time, highlighting the value of long-term planning and compounding interest. This hands-on approach builds financial literacy and confidence in their ability to manage and grow their own wealth independently.
Motivating adult children to contribute to and manage their savings plans or investment portfolios can also be tremendously profitable. Families should try to set up structured investment plans where adult children ultimately take the lead, supported by regular family meetings on financial goals and investment strategies.
This sensible approach fosters a deeper understanding of investments, risk, and the value of savings, which are all crucial lessons for anyone on a path to financial independence.
Multigenerational households
Multigenerational households are increasingly common in the United States. This means that parents, kids, grandparents, aunts, or uncles might choose to live under the same roof. Multigenerational families can benefit from things like shared labor and pooled resources.
They also might have a better quality of life and improved overall wellbeing. Grandparents also don’t have to think about the isolation and loneliness that many seniors experience when living alone. Parents get extra help with raising their kids. And children develop connections with their elders and other family members.
In the US, it’s common for families who just came to our country to live with their extended families. This isn’t solely to pool their finances but also to support each other in navigating a new culture and usually a new language.
Like any household, it’s helpful in multigenerational homes to have open and honest discussions about money and to talk about how everyone can pitch in. A budget planner wouldn’t hurt to have either. Here’s a fantastic option from Amazon: Monthly Budget Book with Expense Tracker Notebook
What have your experiences been like with your adult children? Please feel free to share your thoughts with us in the comments.
And if you found this article helpful, you might also like: Losing Friends in Retirement: 5 Powerful Stages of the Grieving Process
