Financial Therapy: are your adult kids financially independent?

This interesting article describes what steps the parents can take to teach their kids financial independence while they are in middle school or high school, to avoid having them move back in as adults.

“According to the Pew Research Center, only about a quarter (24%) of young adults are financially independent from their parents at age 22. This is down from about a third (32%) of 22-year-olds who were financially independent from their parents in 1980. In addition, almost half (45%) of young adults between ages 18 and 29 currently receive financial help from their parents.”

Parents can teach their kids how to:

  • How to create and maintain a basic budget
  • How to use credit cards in a responsible way, including:
    • “As a general rule, you should not be paying for something on a credit card that you could not pay for today with cash from your checking account. 
    • You should review a credit card statement together to show them the interest rate that will be charged if they only make the minimum payment and carry a balance from month to month. Explain how paying the balance in full every month before the due date avoids interest charges altogether, making credit card usage a wise financial strategy for many. 
    • Credit cards should be paid off every month and should not be used to fund a lifestyle you cannot afford. 
    • You should also explain to your children how using credit responsibly can help them build a strong credit rating. This is critical for young adults, since their credit score will impact everything from their ability to rent an apartment or buy a home. Also stress the importance of paying their household bills on time in order to boost their credit score.”
  • How to save and invest

I offer Financial Therapy to clients to help them work through their own thoughts, beliefs, and feelings around money, so that they are able to counsel their own kids wisely and help them become financially independent adults.