When it comes to our children, for many of us, there is almost nothing we wouldn’t do for them when we’re needed.
But when it comes to our adult children, sometimes the best way to help is to pull back and teach them to help themselves. This is especially true when it comes to financial independence.
While it may seem like helping your child out with bills is a great gift, and it absolutely can be, chipping in on regular expenses can keep them from becoming truly independent. If you are working on helping your son or daughter become financially independent, here are a few tips to help.
SET GUIDELINES (AND A BUDGET)
While the end goal is giving your child the tools to pay their own way, cutting them off out of the blue is likely not the best approach. We suggest having a conversation with your child to start to set some boundaries. This is the time to talk about a timeline, which expenses you’ll expect them to start covering first and how they’ll be able to pay for those items.
A great way to help your son or daughter meet those expectations is to help them create a budget. It could be a spreadsheet, in a notebook or an app on their smartphone, but being able to see where all of their money is spent is a great start to the budgeting process. From there, you can help them to take a look at where they can curb spending and how to build up their capacity to start paying their own way.
And this still can be a great tool if your adult child is financially independent. Big purchases, like a first home or a new car, can still be hard to plan for even if they are out on their own, so budgeting can help people at all stages of financial well-being.
CREATE INCENTIVES
If your child is having a hard time building an emergency fund or saving for retirement, it might be best to incentivize their savings instead of making purchases for them. For instance, you could offer to match their savings at 50 percent or 25 percent to help them build up that nest egg early. This way, your son or daughter gets in the habit of putting money away for important items and you can still feel as though you’re contributing to their financial futures.
TALK CAREER PLANS
This is a big one, especially for children who are newly graduated from high school, college or technical school. The real world can be a scary place, but as a seasoned member of the working world, you can give guidance to the working world’s newest or upcoming members. Talking about the pros and cons of going to school, getting an advanced degree or working their way up through the industry they want to work in can help your child get a head start to earning their own income and starting a new life of financial independence.
Next Step: Speak to Erick, a Financial Advisor
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This article was originally posted by TwinCities.com
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