This is the fourth blog in a four-part series, designed to help you engage your children in conversations about wealth.

Read part 1: Talking with children about wealth 

Read part 2: How to engage children up to age 11  

Read part 3: How to engage children age 12-18 in conversations about wealth

As children become young adults and start living away from home, they might get overwhelmed at times by the financial responsibility that come with living independently. In many cases, becoming self-sufficient requires learning a host of new financial skills and knowing where to turn when you have questions or need advice. 

To help your young adult children begin their financial journeys, consider discussing or introducing the following financial planning concepts:

• Financial goal setting: Some young adults will start their independent lives with resources readily available to them, while others may start the journey with little outside assistance. In either case, it’s important that young adults be encouraged to set short- and long-term financial goals that can help shape how they think about saving and spending money and help them start building their own wealth. A short-term goal is one that can be achieved in the near term (for example, saving $100 each month), while a long-term goal is typically something that will require more time (for example, saving to move to an apartment in a more expensive city or to live alone rather than with a roommate).

• Saving and investing: If your young adult children already have interest-bearing bank accounts, they may have begun to learn the benefits of saving. However, in a low interest rate environment, a savings account may not display the miracle of compounding to its best advantage. If they do not already have investment accounts, this is a great time to encourage them to put their money to work while learning the basics of investing, including the basics of stocks, bonds and mutual funds, as well as concepts such as dividends and interest. As they enter the workforce, these concepts of saving and investing will become important elements of the decisions they may have to make when contributing to, and choosing investments for, 401(k) plans or individual retirement accounts, and as they begin making early financial plans for the future.

• Budgeting: The word “budget” often conjures images of stern taskmasters telling you that you cannot have the things you want. Properly regarded, however, a budget can help your young adult children learn how to save and spend precisely so that they can have the things and the life they want. If they’re wondering where to start, they may wish to explore a money management app. There are many app options available, and they offer budgeting and spending tools, financial education, saving opportunities and access to a debit or credit card.  

• Building credit: Having a sound credit history is important for young adults as they start navigating the world on their own. They may have already begun to establish their credit through being an authorized user on a parent’s credit card and/or applying for a credit card in their own name. As they get older and begin to engage in other activities—such as renting an apartment or buying a car—they may rely on parents to co-sign the related agreement with them. These financial transactions will provide great opportunities to teach them that every positive credit experience can help them build a positive credit history, just as failing to make payments on time will detract from it. Of course, this applies to the co-signing parent as well, creating a “trust but verify” situation to be sure that payments are made.

While it will always be valuable for parents to share experiences from their own lives, discuss topics like those above and be available to answer questions, it’s also important that parents encourage their young adult children to seek outside resources so that their children build a strong financial foundation of their own. Here are some books, podcasts and other strategies that may help your young adult children begin exploring their own financial education and independence: 

Books

• Money Rules: The Simple Path to Lifelong Security, by Jean Chatzky
• One Up on Wallstreet, by Peter Lynch
• Rich Dad Poor Dad, by Robert I. Kiyosaki
• The Millionaire Next Door, by Thomas J. Stanley and William D. Danko
• Your Money Life: Your 20s and Your Money Life: Your 30s, by Peter Dunn

Podcasts

• Afford Anything
• CIBC’s Wealth Your Way
• How to Money
• The Money with Katie Show
• WSJ Your Money Briefing

Other strategies

• Having conversations with their investment and other financial advisors
• Collaborating with peers and family members (both their contemporary and older family members)
• Attending virtual or live financial education events
• Following financial educators and commentators on social media

In addition, we encourage you to reach out to your CIBC Private Wealth advisor to explore our G2G (Generation to Generation) Impact offering and how our broad array of financial content and events can help your young adult children begin their paths to financial education and independence.

Beth Mayfield is a senior wealth strategist for CIBC Private Wealth Management in Atlanta, with more than 20 years of industry experience. In this role, she works closely with clients and their advisors to develop and implement charitable, estate and wealth transfer planning as part of CIBC Private Wealth Management’s integrated wealth management process.