“A financial education for a young person can guide him or her on the road to economic freedom as an adult.”
While school prepares your child for college and eventually a career, you will likely need to sit down and talk with your millennial about the real life issues of managing finances. A financial education for a young person can guide him or her on the road to economic freedom as an adult.
Start by Covering the Basics
The SunTrust 2016 National Financial Confidence Survey indicated that parents help one in four millennials with finances in one or more of the following ways:
- 9% Rent/mortgage
- 11% Medical expenses
- 12% Household expenses
- 13% Car insurance
- 14% Cellphone
However, nearly half of the parents feel stressed out by the additional financial burden this places on them.
You can assess if you child actually needs the help or if he or she simply struggles with basic budgeting skills. If you continue to step in, you might be enabling your children instead of teaching them how to prepare for financial independence in the future.
People of all ages, including millennials, often hesitate to analyze their spending as they might be afraid of what they will find. However, taking control of a budget simply means that he or she is in charge of where the money goes. Instead of money controlling the person, the person controls their money and determines how it will work for them.
Establish a Credit History
Consider using credit for certain charges, such as a gym membership or even a smaller bill since this allows a person to establish credit without maxing out a credit card. At the same time, teach your millennial how to look for perks that will best serve them, such as air miles, cash back and low- or even zero-percent interest rates.
Dealing with Student Loan Debt
Limit student loan debt by taking a year off before starting college to work and build savings. Other options include working while attending school.
Short- and Long-Term Savings
Savings should include short-term goals, such as saving for a vacation or new appliances, and long-term goals, such as saving for a vehicle and a home.
Millennials might opt to use an app for savings options like Qapitol or Level. However, financial institutions offer automatic transfers from checking into savings or similar strategies to boost savings. Put a large portion of any unexpected income or tax returns towards savings as well to watch your account grow.
Putting Aside Money for Retirement
Remind your millennial to take advantage of matching retirement plans from their employers. Investing when they are young can pay huge dividends in the long run due to compounding interest that will make their money work hard for them. They do not need to have a huge amount to begin. Again, apps can make the process easier.
Use Tech Friendly Options
Technology has provided numerous options for millennials, including budgeting apps and other savings tools. They can take advantage of banking and fraud notification.
Building a Business
America still offers numerous opportunities for entrepreneurs who want to be self-employed and build their own business. If you don’t have a business to pass on to your millennial, then you can help him or her find work that will lend itself to self-employment.
As part of that business, parents can teach their children about asset protection so that they can keep the wealth in the family, and in turn, pass it on to their heirs. According to the American Society For Asset Protection, half of all your assets can be eaten up by taxes upon death. Proper planning helps protect against this problem.
Liability coverage won’t adequately protect a business; the owner needs both for proper coverage.
Other asset protection plans include:
- Irrevocable life insurance trust
- Living trust
- Qualified personal residence trust
- Family limited partnership
- Land trust or
- Children’s trust.
Seek Professional Help
Instead of trying to resolve financial matters on your own, seek expert counsel when it comes to building business assets and wealth protection strategies.
Photo: Flickr/Images Money