4 Tips for Teaching Adult Children Financial Literacy

Maybe money management wasn’t something you discussed much when your children were younger. Or maybe, despite your conversations over the years, you’re noticing holes in their financial knowledge now that they are adults. It's never too late to learn how to manage your money responsibly. These tips on how to teach financial literacy can help you navigate the topic with your grown children. 

For personalized advice on managing finances and protecting assets for yourself and your children, talk to Farm Bureau.

Tip 1: Figure Out What Engages Them

Not everyone learns the same way. As a parent, you probably have a good idea of how your child learns best. You may want to:

• Have a series of discussions.
• Talk about your own financial education, including mistakes you made and how you learned from them.
• Share trustworthy podcasts, videos or books.

As your child’s financial literacy improves, you may want to move on to more advanced topics. But at first, make sure they understand the basics.

Tip 2: Help Them Build a Budget

One of the top money management tips for young adults is to be clear on what your income is and how you’re spending your money. 

If your child is comfortable sharing their finances, you can help them set up a budget and review it with them regularly until they get the hang of it.

They may want to keep their income and expenses private. In that case, you can encourage them to track their numbers and see if they feel like they should make changes. Be sure they understand the difference between needs and wants, and how they can budget for a few wants without overspending.

They may want to explore different apps for budgeting, since it can be easier for them to stay on top of their spending if they can easily consolidate their accounts in one place.

Tip 3: Make Sure They Understand Credit

Many young people get credit card offers as soon as they turn 18. If your child has a credit card, be sure they understand that they should keep credit card balances low, and ideally, pay them in full every month. 

Using credit cards wisely can help them build a good credit score, which will be helpful when they want to rent an apartment, get an auto loan or even apply for a job. 

Tip 4: Get Them Started With Saving 

One of the benefits of financial literacy as a young adult is the length of time they have for money to grow. Make sure your child understands how compound interest works, and the difference it makes when you save even a small amount when you’re young.

Help them set up automatic transfers from spending into savings accounts, to put the habit on autopilot. Encourage them to build an emergency fund with enough money to cover three to six months’ worth of expenses, so they’re prepared for unexpected repair bills or medical costs, and they have a cushion to rely on if they lose their job.

Ask them if their job offers a 401(k), and suggest that they start to contribute, even if they can only afford a small amount at first. 

Farm Bureau Can Help

At Farm Bureau, we know how important financial literacy is, and we have a lot of experience in explaining financial concepts to our clients. Reach out to learn more, whether it’s for yourself or your child.