Senior Financial Counselor
As a freshly minted college graduate, I thought I was well prepared to launch into adulthood. But there was one nagging issue that kept holding me back: a lack of credit. Without a credit history, landlords weren’t too keen on having me as a tenant. My attempt to set up a cell phone account was successful only after my sister co-signed my agreement.
My story isn’t unique: Young adults often don’t have a clear understanding of the steps they need to take to put themselves on a good financial path. That’s why financial literacy—from learning how to save and spend wisely to understanding smart strategies for building up a credit history—is critical as children transition into young adults. What can parents do to help ensure their kids have the right financial education?
Learning about money
The first step for many parents is to simply make conversations about financial issues a regular part of the day-to-day routine. That doesn’t necessarily mean having detailed discussions about the family’s finances, however. Parents can use timely news stories as conversation starters to dig into topics such as the importance of saving or the danger of too much debt.
There also are plenty of good resources kids can use to learn at their own pace. Here are a few books and blogs that offer good introductions to the fundamentals of personal finance:
Bridge the credit gap
Hands-on financial experience can help bring these lessons to life for children, and parents can play a big role in helping them safely navigate these experiences. For instance, parents can help kids learn smart credit card strategies. After all, developing good financial habits at an early age will likely pay dividends well into adulthood. Here are some strategies parents can use to help their college-age children build credit:
Kids don’t need to be passionate about financial literacy, but the more they learn about good financial habits as children, the more likely they are to carry them into adulthood. What’s more, those good habits will serve as a solid foundation as they identify and pursue their own long-term financial goals.
|Bill Weydemeyer, MBA, CFP®
Bill is a Senior Financial Counselor and a Principal at The Colony Group. He is part of a team of Colony Wealth Management counselors providing customized solutions to high net worth individuals, families, and corporate executives, including planning and implementing clients’ financial planning, investment management, and tax objectives.