Financial Advisor's Handbook for Discussing Money Matters with Children at Different Stages of Life, from Childhood Savings to Adult Investment Strategies
Empowering Children's Financial Futures: A Guide for Parents
A new study by Ameriprise Financial reveals that the majority of parents (89%) plan to contribute towards their children's college education, underscoring the importance of financial education for the next generation.
The research, conducted by Artemis Strategy Group, surveyed 3,010 American parents with children aged newborn to 30. It found that nearly all (97%) of the parents discuss finances with their children to some degree, and 72% take personal responsibility for teaching them about money.
To help parents navigate the complexities of financial planning, a financial adviser can provide direction and accountability. These experts, including professional wealth managers, fiduciary financial planners, CPAs, and lawyers, can offer guidance on considerations for leaving an inheritance, educating children about investing, and passing down financial values.
Starting conversations about money early lays the groundwork for bigger, more complex financial topics later. For toddlers to pre-teens, explaining basic money concepts, involving them in everyday money decisions, and encouraging the use of allowance or gifted money for saving, spending, and giving to charity are key steps.
As children grow older, discussions can become more nuanced. Teenagers can learn about budgeting for college, handling student loans, and credit, while young adults can be supported in deeper investing education and hands-on investing experience.
It's crucial to communicate decisions about college contributions to children so they can make informed choices about student loans or other means of covering costs. Parents can also discuss the risks and opportunities that come with investing, or share their own experiences with market fluctuations, to help children take advantage of market volatility rather than fearing it.
The first job post-college is a perfect opportunity to discuss steps children can take to establish a strong financial foundation, such as applying for health, life, and disability insurance, and maximizing their 401(k) match.
Parents should be aware that helping adult children fund goals and milestones such as a down payment on a home can put their own financial futures at risk if it means sacrificing retirement savings or other important long-term goals. It's important to clearly establish whether financial contributions to adult children are gifts or loans to avoid confusion or tension down the road.
Using tools like Vanguard Personal Investor Kids account or custodial brokerage accounts provides practical learning and growth opportunities in investing. This multi-stage, age-appropriate approach helps children progress from basic understanding of money to managing investments confidently as adults.
By talking openly about everyday money topics, making money management a regular part of family life, and tailoring discussions and activities to the child's age, parents can establish a strong financial foundation for their children. Letting children make reasonable money mistakes to learn from experience while avoiding shame fosters financial fluency and resilience.
Nearly 9 in 10 parents (88%) working with a financial adviser say the advice was helpful in making financial decisions related to their children. The Kiplinger Building Wealth program features financial advisers and business owners who share retirement, estate planning, and tax strategies to preserve and grow wealth.
Starting these conversations "never too early" can embed sound money habits and attitudes that empower children throughout their lives.
- Incorporating lessons on personal finance into health-and-wellness conversations can help children make informed decisions about their financial health in the future.
- As part of education-and-self-development, discussing college contributions with children can help them understand the importance of saving and budgeting for their own educational expenses.
- Apart from science and health-and-wellness, parenting also includes teaching children about financial topics such as investing, credit, and budgeting, which are vital for their personal-finance and future financial wellness.
