When it comes to our children, there is almost nothing we wouldn’t do for them. But what if doing for them put your retirement or financial future at risk? Should we still be doing these all these things? A great way to avoid this conundrum is to raise money-smart kids! Here are a few tips on how to do that!
Teach your child the value of money.
Learning the value of money can be done even at a young age. Teaching them the difference between a want and need is the first step. Then limit the number of “wants” you fulfil or make them earn things they want. Be the example and live within your means and always communicate what you value and how you spend money to support those values.
Yardwork, babysitting for neighbors or walking dogs are all things younger kids can do to make money. College students who also work on average have higher GPAs than students who don’t and tend to be more efficient with their time management.
Don’t let them attend the most expensive school they get into if you cannot afford it.
Often, education means sacrifices but there are no loans in retirement. And trust me, Medicaid is not a retirement plan. Education is important and helps to make children more employable but there are options besides jeopardizing your financial future to pay for it. Look for alternatives, many businesses like Starbucks and McDonalds offer scholarships for students who work for them.
Don’t allow your children to move into your house rent-free.
Letting children live with you rent free makes it harder for them to leave and for you to get them out! Charge them something and make them contribute towards utilities and food. Also, laundry, cooking and cleaning for themselves should be their responsibility.
If you decide to gift to your children, tie it to something you value.
Yes, you can tell them how you want them to spend your money, especially if it is for additional education or a house down payment, things which will help their financial future. This will not only promote your values to them but help them to use the funds wisely.
Divorce is tricky.
Parents often feel the need to get involved when an adult child gets a divorce, especially if it involves grandchildren or abuse. This can be a tough place to be in but remember that extensively helping an adult child through this could put your retirement savings in jeopardy. And if you have multiple children and multiple divorces happen, what then?
Learn that you cannot fix an addiction by giving the addict money.
This is where tough love really has to come into play. Addiction is always a heartbreaking scenario but financially supporting the problem is feeding the addiction. Don’t be an enabler. There are multiple services available for addicts in most states that can help in a way that doesn’t exacerbate their problems. Seek those out.
Don’t assume your kids will support you in your old age.
Your adult children will probably have their own children and spouses they are supporting and may not have the means or the desire to support you as well. Harsh but true. And as a parent, you more than likely don’t want to have to ask your children for financial support if it can be avoided. Raise financially responsible children and be a financially responsible adult!
There are many financial scenarios that can arise when it comes to your children. Thoroughly think through the repercussions on how “helping” your children will impact your retirement plans and how it will impact how they view money. Educating and sticking to your values will likely always serve you well with tough financial decisions. And raising your children to be money-smart will help everyone! If you don’t know where to start, there are always professionals like our advisors here at WWC that love to educate and help families succeed.
This commentary was originally posted by Lauren Gadkowski Lindsay April 4, 2022
Source: Raising Money-Smart Kids Safeguards Parents’ Retirement (rethinking65.com)
**Disclaimer: This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.