For many young adults, planning their financial future isn’t on the radar. This uncertainty can create anxiety for parents watching from the sidelines. The good news is, experts say it’s never too late to help your adult children develop good financial habits.
Cover the Basics
There are several ways you can help your adult kids become more financially savvy and guide them down the path to saving and investing. Start by encouraging these financial habits:
- Track expenses: Encourage your children to write down how much money comes in and goes out each month. Once they get a clear view of their monthly expenses, they might reconsider that pricey morning java.
- Create a budget: Stress the importance of saving. Keep expectations realistic, as there is a good chance they have student loans and credit card debt. If they can set aside any amount monthly, saving will start to become a habit.
- Build an Emergency Fund: Encourage your children to create an emergency fund so they don’t have to put unplanned expenses on a credit card.
- Set up an IRA: If your adult child is self-employed or doesn’t have access to an employer retirement plan, encourage them to open a Roth or Traditional IRA.
- Explain financial terms: Financial terms can be confusing and intimidating. Define terms such as index funds, asset allocation and target-date funds to your children. Encourage them to ask questions and check out sites like Investopedia to learn more.
- Lead by example: Set a good example when managing your own money. Offer encouragement and remind them that time is their greatest asset.
Remind your adult children that a Fifth Third Bank financial advisor can help them set investment goals and build a savings strategy.