(NC) Raising money-savvy kids may start when they're beginning school, but the most valuable lessons come when they're about to leave the nest. Often, the conversation starts around how much financial independence makes sense for them, and for you.
“Whether they’re going away for school or starting to work, you might consider having those discussions about who is paying for what,” says Shawnnette Fraser, an associate VP at TD Wealth.
Create a financial plan together. As they prepare to start independently handling their finances, go over what questions they should ask themselves and how to create a plan based on the answers. Have them consider things like, do they have to work to cover part of their tuition? Will they need a student loan or line of credit to pay for things like food and housing? Will they have to prepare their own tax returns, and have you taught them how to do it? If you put a plan in writing, together, it can help set clear expectations.
Teach youth to be wary of fraud. Managing your own money comes with additional risks. According to a recent survey, 63 per cent of young adults polled said scams are targeting them now more than ever, especially through social media. 43 per cent said they’d be too embarrassed to tell anyone if they ever fell victim to fraud.
Teach your adult kids to be skeptical of easy money, as well as job and investment scams, and let them know it’s okay to come to you if they feel vulnerable. You can show them security techniques, like setting up two-step verification and signing up for fraud alerts. Help them learn that some of the financial information they'll find on social media will be biased, misleading or inaccurate. The sooner they learn to spot the signs, the better.
Help them build good financial habits. Learning better financial literacy today helps lay the groundwork for future financial stability. While your kids might not be thinking about life beyond post-secondary education right now, it’s still important to emphasize the value of long-term savings with something like a Tax-Free Savings Account (TFSA). This could also be a good time to introduce them to the First Home Savings Account (FHSA) and talk about a strategy for using it.
Make sure they understand your finances, too. Planning for the future also means being prepared for life’s curveballs. Now that your kids are adults, it might be time to discuss your own retirement and estate plans with them. Bear in mind that these are sensitive conversations—you'll be the best judge of your child’s readiness.
As kids step into early adulthood, the way you guide them financially will naturally evolve. At this stage, it's often about supporting them as they find their independence.
