Like it or not, we’re all involved in running the “family business.” We worry that our parents might
outlive their retirement savings, we are worried about our kids going to college, and what our own role
in both might be. We’re often comforted by the thought that family members would probably bail us
out if we got into money or personal trouble. We strive to help our children financially, and we’d like to
bequeath them at least part of our nest egg. Families in the United States are an important part of the
social construct. Families care for one another.
In short, our family is our asset, liability, and legacy. Now here’s the contention: It’s time to build this
notion into the way we manage our money. Many people are willing to help their family members out
financially, so we should recognize this, not just ignore it.
Here are just some of the reasons why:
Raising Children: Parents do have a legal responsibility to care for their children. If you are fortunate
enough, you might want to continue this financial support into college years and beyond. However,
that can be a drain on your own wealth and perhaps even hinder your retirement savings.
If you don’t want your adult children swimming in credit card debt, missing mortgage payments, and
constantly asking you for money, start by teaching your children financial literacy and best practices at
a young age. This is how most people learn about money. Try your best to instill in them positive
financial behaviors from a young age. Even if you are not born into wealth, you can teach financial
literacy to your children.
That’s trickier than it seems. Children can grow up sheltered from the money talks at home, only
seeing spending and not the earning, budgeting, and saving. After all, for children, all purchases are
free, so why should they fret about the price tag or control their desires? Instead, teach children the
basics of money, about earning money, and the importance of saving.
One way to do this is to make your children feel like they’re spending their own money. Give them an
allowance when they are younger based on doing chores, and a clothing allowance when they are
teenagers, and insist they live within this budget. This way, instead of you constantly saying “no” to
your children, they will learn to say “no” to themselves. They will also learn the benefits of positive
Launching Adults: Once your children get into the work force, you want them to get into the saving
and investing portion of their financial life cycle where they are steadily building wealth. However, if
they do not understand debt, they can fall behind quickly and struggle to ever catch back up.
It is also important to discuss student loans and credit cards with your young adult children. These
types of easy access funds can quickly have a snowball effect, because the young adult can quickly
borrow and push off the pain of repayment into the future.
If your young adult children can start down a positive financial path early on, the easier it will be for
them to meet their goals and less of a financial drain on you. To that end, encourage your children with
your words and with your fine example. We don’t have a duty to just support our kids financially, but
to teach them how to be financially independent later in life. This starts with the basics of financial
- The above material was prepared by Carson Coaching.
- Raymond James is not affiliated with and does not endorse the opinions or services of Carson Coaching.
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