Raise money-smart adult children

by Dave Dupont
Wednesday, March 5, 2014


Youíve heard the term money-smart children. 

Maybe you tried to raise some of your own, teaching them about financial responsibility through investments, budgets and credit. 

You showed them how to plan for short-term goals, like purchasing a car or going on a vacation, and long-term goals, like saving for retirement or paying off college loans. 

But what do you do when those kids become adults and the lessons of early childhood just donít seem to have taken as you had hoped? In other words, how do you try to form money-smart adult children?

After college, chances are your children are going to be making real money for the first time in their lives. As graduates balance the reality of low-wage entry-level jobs against not only living expenses, but also in some cases thousands of dollars in student loans, most recent graduates can barely make ends meet, let alone contribute to a 401(k). 

Rather than giving your child a handout to get him or her started, think about creating incentives that will help save money. Encourage your children to contribute to a 401(k), and tell them that you will match any deposit that exceeds $1,000. If they are paying off student loans, offer to pay all or part of the loan and charge them a lower interest rate than they would pay through the lender. 

Even when your children start to get their financial legs, continue to help foster their financial independence. If itís a business venture your child wants to pursue, encourage your child by offering a low-interest loan rather than seed money free and clear, or become a legitimate investor in the business. If itís funds for a down payment on a first home your child needs, create a contract where you can teach financial responsibility while helping your child avoid high interest rates and the hassle of a regular loan. 

There will always be times when you want to help your kids out financially, but itís better to cut the purse strings early rather than have a 50-year-old child living in your basement. Show them the value of financial responsibility and illustrate the difference a few extra years of saving or investing can make. Your kids will be more likely to react to concrete numbers and a realistic plan, and that will also help them achieve their financial goals. 


RBC Wealth Management, a division of RBC Capital Markets LLC, Member NYSE/FINRA/SIPC


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