Yahoo Finance Time To Leave the Nest — 10 Ways To Help Adult Children Gain Financial Independence
Say your adult child never left the nest — or they moved back home for a period of time but are now way too comfortable to leave.
These scenarios are all too common, but according to experts, there are fool-proof steps you can take to help them gain the financial literacy and knowledge to successfully move on (and to stay that way).
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“I’ve learned that financial literacy is foundational for anyone aspiring to achieve independence, inclusive of adult children seeking to navigate their financial futures successfully,” said Philip Wentworth Jr., co-founder of Rockerbox Tax Solutions.
Here are some strategies to help you go about it.
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Start With the Fundamentals of Personal Finance
“One actionable strategy I often recommend to parents and guardians is the integration of financial education into everyday life,” Wentworth Jr. said.
“For instance, sharing insights about budgeting, tax planning, and the significance of saving can open discussions that prepare them for financial autonomy.”
Jonathan Feniak, general counsel at LLC Attorney, agreed this is the first step to take — educating them about the fundamentals of personal finance — budgeting, saving, investing and the power of compounding interest.
“Practically, you could involve them in household budgeting or setting them up with a brokerage account to learn investment strategies.”
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Create Confidence With Real-World Financial Exercises
“In the realm of practical application, I’ve observed the power of real-world financial exercises,” Wentworth Jr. said.
“You might consider engaging your adult children in the process of creating and maintaining a budget or even involving them in your own financial planning discussions to provide a hands-on learning experience.”
He said this could extend to tasks as simple as grocery shopping within a budget or as complex as evaluating family tax obligations.
“These experiences not only teach valuable skills but also build confidence in financial decision-making.”
Foster Independence by Leveraging Technology
Leveraging technology can be a game-changer in fostering financial independence, experts say.
According to Wentworth Jr., encouraging the use of financial management apps or online resources can provide adult children with accessible tools to track spending, savings and investments.
“My tenure in tech-oriented entrepreneurship underscores the importance of embracing these platforms for enhanced financial literacy.”
“By guiding them to set financial goals and monitor their progress digitally, they gain insights into the practical aspects of managing finances in today’s digital age.”
Weave Financial Literacy Into Daily Routines
“Weaving financial literacy into daily routines, encouraging hands-on learning, and harnessing technology are pivotal in empowering adult children to achieve and maintain financial independence,” Wentworth Jr. said.
He said these strategies not only provide them with the skills needed but also instill a sense of responsibility and confidence as they navigate their financial journey.
Have Them Consult With a Financial Advisor
“I suggest encouraging adult children to consult with a financial advisor independently,” said David Brillant, tax, trust and estate lawyer at Brillant Law.
He said this step can demystify financial planning and provide them with tailored advice that meshes well with any existing family estate plans or trusts.
“It has been my experience that this strategy fosters a sense of ownership over their financial future, encouraging a more proactive and informed approach to personal finance.”
Set Up a Trust That Encourages Independence
“Implementing a trust setup, which I often recommend to clients, can serve as a practical educational tool for adult children,” Brillant said.
For example, he said a trust can be structured to release funds based on certain achievements that encourage responsibility, such as completing a degree or securing full-time employment.
“This method not only provides a safety net but also incentivizes milestones towards independence.”
Involve Them in Estate Planning
Involving adult children in the estate planning process can be an invaluable practical lesson in financial management, according to Brillant.
“By engaging in discussions about wills, healthcare directives, and powers of attorney, they gain insights into the complexities of financial planning and the responsibilities that come with managing assets.”
Host Regular Family Financial Meetings
“One of the key strategies I’ve shared with parents to help their adult children gain financial literacy and independence involves detailed family financial meetings,” said David Blain, CFA at BlueSky Wealth Advisors.
“We’ve encouraged families to sit down together periodically to discuss financial goals, savings, investments, and even expenses,” Blain noted. “This openness not only educates but also demystifies the financial planning process for adult children, making them more comfortable and informed when making their own financial decisions.”
Set Financial Boundaries and Responsibilities
“From advising various clients, I’ve seen the importance of setting financial boundaries and responsibilities for adult children who are living at home,” Blain said.
He said this might include contributing to household expenses, managing their personal budget, or saving a certain percentage of their income.
“One family I worked with implemented a ‘rent’ system for their adult child, which was then secretly saved and returned to the child as seed money for their first home purchase.”
“This practice taught the child budget management, the value of money, and prepared them for independent living expenses.”
Encourage Them To Invest Early
“Encouraging and guiding adult children to invest early, even in a small way, has been a cornerstone of my advice to parents,” Blain said.
“Leveraging tools like Roth IRAs and low-cost index funds can be a great way for young adults to see their money grow over time, emphasizing the value of compounding interest and long-term planning.”
He said this hands-on approach not only builds financial literacy but confidence in their ability to manage and grow wealth independently.
John F. Pace, CPA and tax partner at Pace & Associates, agreed.
“Encouraging adult children to contribute to and manage their investment portfolios or savings plans can also be tremendously beneficial.”
“In my role, I’ve advised families on setting up structured investment plans where adult children take the lead, supported by regular family discussions on investment strategies and financial goals.”
He said this practical approach fosters a deeper understanding of risk, investment and the value of savings — crucial lessons for anyone on the path to financial independence.
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This article originally appeared on GOBankingRates.com: Time To Leave the Nest — 10 Ways To Help Adult Children Gain Financial Independence
