[vc_row][vc_column][vc_single_image image=”3351″ img_size=”large”][vc_column_text]You love your children and want to protect them from the big bad world of finance. It can be “rough and tough, and blow your house down” scary out there.
You’ve provided for them for years and want to shelter them from all the financial mistakes and struggles you went through. As your adult children begin to head out into the real world, your first thought may be to help them financially. But this may not be the best plan of attack for setting them up for their financial future.
You have spent years, maybe decades taking care of your children’s financial needs. Now, you need to start considering your own needs and focusing on saving for your retirement. There are many ways to help your children that doesn’t involve lending them money. Give them the greatest gift by providing them with the tools and resources they need to achieve individual financial success. Here are a few ways you can help your adult children without giving them money.
Communicate practical financial mistakes
Do you remember when you began your financial journey? Did you feel lost when it came to financial advice? Most likely, your children feel the same way. Navigating the scary world of finance can be intimidating and overwhelming. That’s why any practical financial knowledge you have collected over the years should be shared with your kids and grandkids.
Stop and think about your financial experiences over the years. It may have been rough, but through trials and tribulations, you have accomplished a lot. Think back to times where you may have made some avoidable financial mistakes. Was there information you wish you would have known before moving forward?
By sharing your financial mistakes with future generations you can help them avoid painful financial failures. Take the time to sit down with them and discuss solutions for avoiding mishaps. The more transparent you are, the more they will learn. From tax reporting mistakes to first-time homebuyer mistakes, your children have a lot to discover from your financial past.
Educate them on financial tools and resources
Sometimes knowing where to look for financial advice is half the battle. There are plenty of financial tools, resources, and experts to help you with all your financial needs. Sharing these important tools and resources with your children can save them a lot of time and financial missteps. Here are a few things you may consider sharing with them:
- Financial apps: Don’t financial apps make your life so much easier? If you find technology helpful when it comes to managing your finances, your children will too.
- Personal finance blogs: You can find financial advice at every corner. Financial experts have all sorts of perspectives on investing and retirement strategies. Share some of your favorite finance blogs with your kids. If you don’t have one, do a little research and find a financial expert that aligns with your financial needs. Maybe even find one that can add some humor to this the dry topic.
- Friends and family with strong financial knowledge: Think about your network of friends and family, is there anyone who could provide practical financial advice? Connect your network with your children to give them a broad scope of the financial industry. Talking with your friends and family will encourage your children to be more comfortable talking about finances. It can be a sensitive and boring subject, but the more they talk about it the more comfortable they will become.
- Important financial websites: Other resources you may want to share with your kids include the following:
- (a) IRS.gov will give your adult children all the information they need about filing their taxes. It’s an informative resource.
- (b) SSA.gov provides information about Social Security. You can create an account to review your current Social Security benefits and protect your identity.
Introduce them to financial professionals
Through your years of financial experience, you may have crossed paths with many financial professionals. Whether they were an acquaintance or you hired them to help you with your finances, you may know plenty of financial professionals that could help your children move toward a successful financial future.
Two important financial professionals you may want to introduce to your children are a financial advisor and a tax professional.
- Financial advisor
A financial advisor or planner can help you plan for your future and develop a secure financial plan which includes debt repayment, saving for college, and developing a retirement investment strategy. They help you see the big financial picture and assist you in making financial decisions that align with your goals.
A financial advisor or planner can support your children and hold them accountable to their goals. The sooner your children begin to work with a financial advisor or planner, the sooner they can start achieving their financial objectives.
- Tax professional
Just thinking about your taxes may leave you feeling overwhelmed. Your children feel the same way.
Tax planning can be extremely complex and confusing. According to the IRS, Congress has made over 5,900 changes to the tax code since 2001. It would be a full-time job to keep up with all these changes.
Introducing your children to a tax professional can help ensure they are filing their taxes correctly and not missing any deductions.
Your children may need to meet with several financial professionals to determine which one will fit their needs as well as their price range. But beginning the introductions can help start the process and get your children on the right path to financial success.
Express the power of saving and compound interest
Unfortunately, many individuals don’t understand basic financial concepts. This is why it’s important to educate your children on financial topics that they can utilize throughout their lives, such as the importance of saving and compound interest.
It may be beneficial to show them a tentative example of how saving and compound interest is key to reaching their financial goals. Try using a retirement calculator to prove how consistency and patience can yield financial abundance. They are at a prime time in their lives to begin saving and making an impact on their financial future.
Other financial terms that may be important for your adult children to understand:
- Asset: Property owned by a person or company which can include retirement accounts, real estate, goods, valuables, and other tangible resources.
- Liabilities: Any legal or financial debt.
APR: The total amount of interest you will pay on an annual basis. - Diversification: Investors use diversification to minimize risk by investing in different asset classes, industries, financial instruments, and other investment categories.
- Inflation: The increase to prices and the decrease to the purchasing power of money.
- Net worth: Your assets minus your liabilities.
- And more..
The bottom line
Giving your adult children money may help them in the short-term but may not give them the skills and tools they need to be financially successful. They may be at a pivotal place in their lives, that’s why it’s important to introduce them to financial resources that will help them reach their goals and objectives.
Don’t bankrupt your retirement for their financial well-being! You’ve worked hard to save and plan for your retirement years, you deserve to enjoy it.
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