Raising Financially Independent Kids — At Any Age
When they’re really young (toddler to tween)
Don’t give them everything they want. Learning delayed gratification and the connection between doing the right thing and earning the appropriate reward should start young — and continue, well, forever.
Encourage problem solving. Financial independence begins with critical thinking, and critical thinking begins with problem solving. Don’t jump in with solutions, let your kids find their own from a very early age.
Tie allowance to chores. Making a connection between work and money is a powerful lesson to learn young.
Start saving and gifting early. Require (or at least strongly encourage) saving and giving a portion of allowance, birthday money, etc. You might even try a “401k day” where you match the amount they save.
As they mature (tween to teen)
Talk long-term. Long-term thinking begins with long-term talking. Have conversations about the power of compound interest and the value of saving for cars, college and even a first home.
Model good behaviors. When you save, give, spend wisely, and invest, your kids will notice. Teaching by “do what I do, not just what I say” is a powerful tool.
Practice gratitude and charity. Helping kids understand the gifts of all they have and the rewards of helping others (not just with money, but also by volunteering time) is critical. Talk about it openly. Make plans together. Focus on character over things.
Encourage employment. Teenage jobs teach important lessons. Supporting part-time work during school or summers will teach life lessons and give teenagers a view into the sorts of work they enjoy (or don’t.)
Get them credit smart. Credit and debt, from credit cards to student loans to mortgages, are a big part of most of our lives. Educate your kids on the opportunities and dangers of these tools.
Do the math. At this age, it’s time to discuss the financial reality of adulthood: the costs of
college, rent, health insurance. If they don’t know what things cost they can’t begin thinking
about their budget.
Adults (20s + beyond)
Set boundaries. It’s great to want to help your kids. It’s not great if they become reliant on your help. Set limits to your generosity and set the expectation that you raised a responsible, independent adult, not a perpetually dependent child.
Help when they need it… with a plan. Sometimes adult children need financial help. But that help should come attached to a plan that will get them standing on their own two feet. Whenever you offer any assistance, also include time to share your wisdom.
Treat them as the grownups they are. If you offer a loan, have them pay it back with interest. If they live at home, have them chip in with “rent.” These are opportunities to teach them how the “real world” works — with more friendly terms.
Guide, don’t prescribe. Remember: it’s their life. Don’t try to define their career or other types of “success.” Instead, give guidance and help them accept responsibility for their actions — and the results of those actions