Do Your Adult Kids Have a Clue? Part II
Last month, we addressed how important it is that you begin sharing your plans with your adult children so they can be there for you, but also so you can be there for them. As adults, they also need to take steps to take care of their own futures. We work to develop relationships with the adult kids of our clients. These are some of the basics that help them with, based on their stage of life:
Live by a budget. From the time kids are juniors in high school, they should be managing money and hopefully developing a budget of needs vs wants. They should be developing these skills as they go to college, and right after, as well. It’s a critical life skill. Along with this comes building and protecting credit.
Build a cash reserve. As part of budgeting, even teenagers can start setting away a “rainy day” fund. If they start young, by the time they have families of their own, they will have a cash stash for emergencies, and you won’t have to be their bank. In a report by the Federal Reserve this year, nearly 40% of Americans can’t cover an unexpected $400 expense. If you look closely at the study, many of the ones who could have to borrow to do so.
Utilize company benefits. Company benefits are great, but many times people sign up for and pay for items they don’t need and don’t have critical benefits they do need. Young adults often don’t bother with retirement plans, missing the match, or they sign up for perks they won’t use.
Get the right insurance. Along the company benefits line- we see mistakes made with insurance with the adult kids of our clients. Everyone needs a good explanation as well as a regular review of the different kinds of insurance and what to buy at different life stages. Their company can be a great source for some types, but not for others.
Do basic estate planning. Every adult should have powers of attorney and a living will. If they have children, they need AT LEAST a will to appoint guardianship. If your adult children have a lot of assets, or life insurance with minor children, then a trust may also make a lot of sense. This is one of the big areas we see adult children of clients miss the mark on once they start families of their own.
Save for the future. Young adults today are strapped far more than their parents were. Saving for the future may be the furthest thing from their mind. Their lives are crazy, and with a little advice, they can get on track with a systematic plan that they will help them in the long term without them having to do much after they get it set up.
Plan for their careers. The day to day of life get nuts for young adults once they start families. Career coaching and planning can help a lot to help them proactively build income and their professional lives. Just having someone to remind them to ask for that raise can make a difference.
Here’s the deal. You are Mom or Dad. You can’t just go take them to lunch and grill them like a panini. But as you are sharing your own planning, with each topic, you can ask them what they are doing and learning. Allow them to tell you what they are doing so you can assist in filling in the gaps, should there be any. And remember, we’re a resource for our clients to help you be life-long role models for your adult children.
Data for blog content: https://www.cbsnews.com/news/nearly-40-of-americans-cant-cover-a-surprise-400-expense/