You turn around twice and you’ve got kids entering their young adult years. And while you’re pretty sure you covered a whole range of topics that will serve them well as they launch out on their own, there are some things in all the hectic and busy of raising kids that might have gotten skipped.
Financial basics for your young adults can be a little tricky. There are family cultures in which money is rarely discussed. Or maybe you taught them some simple ideas back when they first started getting an allowance or their first part time job, but they need some more details and strategies as they head out on their own.
Here are five topics to discuss with your young adult child that will have them feeling more prepared and ready when they sign that first lease, get that first ‘real job’ paycheck, and start taking care of all their expenses.
Housing Costs: Rent and utilities can be a big surprise to the pocketbook. Make sure your older teen/young adult kids are familiar with security deposits, renter’s insurance, utilities costs, WiFi services, and how much it will cost to break a lease should they need to. It’s also important for your young adult to know that there are significant differences in cost of living across the country. Just because they got a job offer than sounds like a king’s ransom where you currently live, it could be undermarket for where that job is located. Researching a new area to call home means learning all you can about what average salaries and costs are in a new town.
Food and Transportation: Just like housing costs, groceries, going out to eat, and getting around a new city can cost more or can cost less. And if your child is planning on settling in your city, they need to factor in that they’ll need their own vehicle, car insurance, grocery budget and entertainment spending. Show them simple ways to both determine these costs and budget for them. Provide them with a checklist of common expenses (including that cell phone service) so they don’t get surprised by things they didn’t know to think of.
Health Care: Being part of the Altrua HealthShare family can be a great way to cut the cost of traditional health insurance, making a big impact on the bottom line. If your child is part of your Altrua HealthShare family membership, they will need to enroll in their own individual membership when they turn 23 years old. There are excellent individual memberships available through Altrua HealthShare. You can call a Member Services Representative for more information at 1.888.244.3839.
Create an Emergency Fund Early: Explain to your young adult how they can set up a separate savings account specific to financial emergencies that come up. It’s recommended that someone have three to six months of living expenses set aside in an emergency fund. That amount of money can sound overwhelming when you’re first setting out, so remind your young adult child that it’s about getting into the habit of saving a set small amount and doing it consistently each month. And while you’re having the conversation about an emergency fund, also give them some ideas on preparing a retirement fund as well. Saving habits established early can make all the difference over the long term.
Responsibly Build Credit: Good credit scores will help your young adult qualify for car and house loans, even business loans in the future. A secured credit card or a student credit card can be a great way to begin to establish that good credit. However, there are vendors out there who overcharge, encourage irresponsible spending, and lower credit scores. Let your young adult know that they need to research reputable companies for credit cards that will take them to good scores and goals, instead of high interest debt. Show them how they can monitor their credit score through free sites that won’t ding their rating.
A big part of successfully launching your young adults is for them to be financially independent. Every family has their ideas about what that independence should look like and at what age and stage it should start, but the accomplishment your young adult will feel when they are providing for themselves, with responsibility and planning, is an amazing gift. Your willingness to prepare them for financial literacy will give them a legacy of smart financial decisions in the years to come.