When it comes to your adult kids and money matters, your best strategy is to encourage, empower and educate where and when it makes sense.
Encourage a personal approach to money management
Whatever your kids’ strengths, you can offer financial wisdom. For example, if your daughter likes fitness apps that help her track strength and sleep goals, she’d probably enjoy money-tracking apps like Mint, Wealthsimple’s investment tracker or Splitwise. If she’s already using them, let her show you how they work.
If your adult son likes working extra shifts for the money, ask him what big thing(s) he’s saving for, and if he’s using a high-interest savings account (HISA) to help. Message him with a link to a site that compares HISAs, like ratehub.ca. It might be the first time he feels empowered to save, or he might surprise you with how much he’s already socked away.
Busy young parents may appreciate practical, quick daily savings tips, like how to cut down banking fees, negotiate a better internet rate, or build a quick budget using a spreadsheet to help manage costs for groceries, housing and childcare. And, as a grandparent, you can shift your gifting to RESP money for your grandchildren’s future education — that’s a win-win for everyone!
Compound interest is the golden ticket
Eleven dollars per day (the equivalent of a latte and muffin) invested at a rate of return of 7.5 per cent over a working career is what it takes to retire with $1 million. What if your adult children knew that information or played around with a compound-interest calculator like the ones on thecalculatorsite.com and getsmarteraboutmoney.ca or participated in an employer savings program?
I’ve found that asking questions about dreams and goals and having upbeat conversations that spark financial curiosity are the most effective ways to help your adult children start investing for the future. Some families with more financial flexibility “match” savings efforts to help kick-start the habits, and that’s a great option for younger adults who might not have a solid income yet.
Outsource financial advice
Outsourcing to a pro can neutralize any sensitive family dynamics. And experts probably know more about trending financial matters for young adults than you do — for example, how hard it is to buy a home now and how you can still be wealthy even if you rent, and the challenges with planning for retirement when employers provide less job security than they did in the past. And experts can insert fresh ideas, tools and templates, and blunt reality where needed.
You could make an introduction to your own financial planner, offer to pay for the services of a money coach, gift them a course that teaches budgeting or investing, and possibly ship them a hot new book they can relate to: Die with Zero, by Bill Perkins, or I Will Teach You to Be Rich, by Ramit Sethi, or Tori Dunlap’s Financial Feminist. They may even suggest what might work for them, and that’s great too.
Close your wallet
Everyone needs privacy. But, if a financial request is being made of you, and you’re in a position to help, you should understand why, and how, your money might make things better. This is an opportunity for your kid to sharpen their pencil and establish a solid budget that demonstrates their need. Chances are they have already done this work using a Google budget template or via a tool like You Need a Budget (YNAB) or EveryDollar.
Hear their pitch. Collaborate with them on some ideas like “We’ll add xyz to the pot once you hit xyz savings goal,” or tell them about other debt consolidation methods if that’s what’s needed. And, if it’s just not in the cards for you to support them, be honest.
Neither you nor your kids need to disclose financial details, but talking openly about what is possible, and about having a purpose for your money, can elevate financial literacy for both sides.
