From crawling to driving a car, and much more in-between - it's a privilege to share the knowledge that helps shape a young mind. Although life lessons will look a lot different when children have grown and are more independent, the new experiences that adulthood brings will continue to offer opportunities for teachable moments and candid conversations. Whether your child is just beginning to explore the responsibilities of adulthood or is well on their way to building a stable career, these timeless financial lessons will encourage long-term well-being and stability through each stage of life.
Recent Graduates: Pay Yourself First
After graduating from high school, adolescents are poised to embrace a new level of financial freedom. While they may understand the basics of managing money, figuring out how to balance more financial obligations can be a reality check. Now is the time to reinforce the importance of saving money as part of that balance, but how do you help them make measurable progress?
"During a transitional phase of life when budgets are often wishy-washy, encourage your child to treat a savings account as if it were another financial obligation," says Ellen Lalwani, Chief Retail Officer, Lakeland Bank. "When guiding my children, I suggest they make it a habit to pay themselves first by including this payment in their budget, just like paying for their phone, music service, or college textbooks. If they can make consistent, even minimal, deposits into a savings account, they can learn to measure progress by their savings account balance."
Teaching children from a young age to pay themselves first can help build a foundation of good financial habitats and provide a path to make worthwhile strides toward preparing for future economic milestones. Buying a home, leasing a car, getting married, or traveling abroad may not currently be on their radar. However, being financially prepared for what life may bring will help ensure money is in place to keep them moving forward.
Career Climbers: Invest Early and Actively
After landing a job and making the transition to working regularly, a consistent paycheck will begin to pave the way for moving out, purchasing a new car, and having more money to spend on discretionary items. Young adults at this stage are probably not thinking about a post-career life when they are relatively new to the workforce, but it's in their best interest to make it a priority to set up a retirement savings plan as soon as possible. Much like paying yourself first, encourage your child to establish a regular payment to a retirement investment program. Help them understand that the sooner they start contributing to a retirement plan, the more time their deposits will have to multiply and grow. The best guidance you can share is to advise them to participate in any retirement program offered by an employer, especially programs with an employer match benefit. Even if there is uncertainty if they will be at their current employer for an extended period, it's always worthwhile to take advantage of retirement plans that can be rolled over into future investment accounts. And if they are taking the consulting or freelance track, help them set up an individual retirement account to make regular contributions for the future.
Established Money-Makers: Protect Your Assets
As your adult child settles into a comfortable financial rhythm, their monetary picture may be much more complex. They may have finally found their career niche and are experienced enough to secure higher-level roles to earn a larger paycheck. With a potential family, home, and investments to their name, it's essential the appropriate steps are taken to protect those assets. This stage of life may be the best time for them to seek the advice and expertise of a financial professional.
"A financial advisor can be a valuable resource for an array of fiscal situations. An advisor can evaluate current investment strategies, suggest ways to streamline retirement savings efforts, present a range of insurance coverage options, and much more," said Lalwani. "At this point in your child's life, the financial complexities may be well beyond your repertoire. However, a nudge in the right direction toward protecting all that they have worked hard for is an important task."
As your child navigates the financial complexities of life, there will always be a lot to learn. While the insight and information you share with them will change as time passes, there will still be great value in serving as a sounding board, sharing personal experiences, or even guiding them toward an expert for extra support. Who knows, they may even end up helping you learn a lesson or two!
Visit our Simply Speaking Blog for more information about establishing good financial habits.