Encourage Financial Independence in Your Young Adult Children
Managing money is an essential skill for leading a responsible adult life. Skills are best learned when taught early and practiced regularly. It’s important for families to have effective ways of dealing with financial transactions among members.
1. Connect “earning money” with “getting what you want.”
Conversely, NOT earning money means NOT getting what you want.
2. As early as possible, encourage your child to think within financial boundaries.
Help your child establish a realistic budget for expenditures.
3. Remind child that the income boundary for spendable dollars is
Earnings - all deductions (Social Security, Taxes, and any other payroll deductions)
4. During teen years, ease your teenager into accepting some financial responsibilities
for his/her own expenses: Examples: auto insurance, gas, spending money, phone,
5. Have a clear understanding of expectations: Yours; Your Child’s
Your “financial aid”--What kind? How much? How long? What conditions?
6. Help your child establish a lifestyle that can be maintained away from home.
Examples: apartment; auto; clothing
7. Be a sensible and sometimes hard-nosed lender. Don’t be a “BAIL-OUT” parent!
Why is a loan necessary? Instant gratification?? Poor money management??
Put the loan in writing with terms (interest, length of loan, payments).
8. If adult child lives at home, have a rent and food payment to help child establish
a realistic spending plan for eventually living away from home.
9. REMEMBER THAT EXPERIENCE IS STILL A GOOD TEACHER!
PROCESS FOR DEALING EFFECTIVELY WITH FINANCIAL MATTERS
1. Determine needs and concerns of the parties.
What are expectations?
2. Gather information and facts.
3. Explore options and project consequences.
Be creative. Do some brainstorming.
Can plans be realistically implemented.
Work out terms of an agreement. Be specific.
Get terms in writing for a clear understanding of what has been decided.
Agree on a future time to review what has happened and to determine how it is working.
What adjustments should be made?