Raising Financially Responsible Kids

kids drawing

To teach kids about money and savings, talk to them in a way they will understand and find fun, says Alina Tugend of the New York Times

Ask any parent what they really want for their kids, and they’ll tell you they want them to be happy.

If they could ask for two things, parents would probably say they also want their kids to be financially self-sufficient so they don’t need to struggle or go without.

We recently spoke with journalist Alina Tugend for a New York Times piece on the secrets to raising financially responsible kids. (Click here to view the full article).

“If they are young, talk to them about money and savings in a way they will understand and find fun,” says Tugend. You might want to research or invest in companies they know and admire, like Apple or Starbucks.

Teach kids about budgeting, and the trade-offs involved in spending all your money now or investing for the future.

You might be surprised how much kids can learn about money and making good money decisions just by observing you and discussing money matters around the dinner table.

We mentioned to Alina that one of our favorite money moves for teenagers or young adults is opening a Roth IRA.

(Timely tax tip: the deadline for funding your Roth IRA for 2016 is coming up soon on April 18, 2017).

As soon as your children start earning money through summer or after-school jobs, you can open a Roth IRA for them, even if they are under age 18.

Unlike traditional IRAs, which are funded with pre-tax earnings, Roth accounts are funded with after-tax dollars, so they are perfect for young people who are in a low tax bracket and have years of saving ahead of them. Don’t be fooled by the small amount of that annual Roth contribution. Disciplined Roth savings over time can grow the account well into the seven figures by the time your child actually retires.

The Takeaway: Getting your kids off to a solid start, armed with good money habits, is critical. Starting to save early can make the difference between financial success and a lifetime of struggle.

Some of our clients may not be aware that we will gladly arrange a complimentary meeting with their sons and daughters as they graduate from college or land their first jobs.

We can help them with signing up for that first 401(k), Roth or Traditional IRA; buying their first home; reducing student debt; and preparing for their first baby. We’re happy to share our years of experience working with families just like yours. The right guidance can give you the peace of mind knowing that your next generation is starting off on the right track.

About Mari Adam

Mari Adam, Certified Financial Planner™ and President of Adam Financial Associates Inc, has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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