Many millennials are now planning families. Some already have one or more young children or even one who is learning to drive or getting ready to go to college. Raising kids to be financially independent can ensure they start their adult lives on solid financial footing. In many cases, this can mean they won’t have to spend their first few years out of college trying to pay off debt with low-income jobs, allowing them to focus on other things like saving for retirement or traveling. Here are some tips on how millennial parents can raise children that grow into financially independent adults.
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Start As Early As Possible
One of the most essential things you can do is start saving for your child as soon as possible. Don’t only open the usual custodial savings account but be sure to start a 529 plan as well.
A 529 plan will help immensely with many educational expenses, not only for college costs but also for K-12 and even some apprenticeship programs. By getting an early start on saving for your child, you’ll also reap the most benefit from compounding interest.
Provide Rich Financial Education
As early as you feel is appropriate, start teaching your children not only about money, about other aspects of the financial world. It will be a process, but many resources are available that make it easy to give your child early insight into becoming financially independent.
Some websites that offer interactive children’s financial education include Rich Kid Smart Kid & The Mint, which cater to kids of all ages, and HIP Pocket Change, which the US Mint operates to help even young children begin learning the foundations of financial education.
Invest Vigorously
Be sure you aren’t just sticking cash into savings but that you’re investing it on your child’s behalf with the goal of eventual independence. Stocks, bonds, and other long-term holdings are ideal for helping build a stable financial launchpad for their adult years.
Be Frugal
Your child will learn financial habits from you, so lead by example. Regardless of your income level, live modestly and demonstrate frugality, particularly with credit cards and when making big purchases. Your child will notice.
Help Them Acclimate To Adult Life
Helping your children build a sound financial foundation doesn’t end on their graduation day. Allow them 1-2 years following graduation to acclimate to adult life.
During this period, communicate with them and arrange to wean them off of your support, such as cell phone payments, insurance plans, and so on, item by item, while they become self-sufficient.
Have Realistic Expectations
Life will happen, and even if things are on schedule today, they may not be tomorrow. Some children may need more guidance on the journey to becoming financially independent, while others may take to it more naturally.
In the end, your child will grow to be their own person, and you can only do so much for them. However, these tips can help you give them a great head start.
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