The next generation: three critical money conversations with your younger adult child

Part 4 of 4

More and more younger adults are living with their parents instead of on their own, and money is perhaps the biggest reason why. That’s why it’s important to have these three money conversations with your younger adult child.

Conversation #1: first credit card

According to a report by The Motley Fool, American credit card debt reached an all-time high in 2018, the latest data available, of $870 billion. Though this is lower than its peak during the 2008 financial crisis, it’s been steadily increasing since 2015. According to the report, 52 percent of those 20 to 29 years old have a credit card.

To avoid the potential for misuse, you should discuss the following with your child:

• What is credit?
• Understanding your FICO score
• The basics of interest charges
  

Plus, you should share your personal experiences, good and bad, with credit cards. If used responsibly, remember that the college years are a great time for your younger adult child to be building up his or her credit history.

Conversation #2: first serious relationship

There are many conversations to be had—and to encourage your younger adult child to have with his or her partner—when it comes to the first serious relationship. You should encourage your son/daughter to have open dialogue with their significant other about finances to discover whether they’re aligned. Are they spenders or savers? Do they have similar family money philosophies? Are there future education costs to consider? If the couple is cohabitating, discuss how to handle shared bills and expenses related to the home. Discuss financial implications of marriage and children. Will they be a dual-career couple, or will a parent stay home? Getting your child comfortable with these conversations will help him or her have them with their significant other—which is a step in the right direction toward an open, honest, financially stable relationship.

Conversation #3: first adult job

When considering conversations with your younger adult child, give him/her the kind of help you would offer a young colleague. Beyond talking with them about how to evaluate whether a job is right for them, remember that kids often wish their parents taught them:

• The importance of networking and making connections
• How to make good impressions
• How to negotiate
• How to exhibit a strong work ethic

Where to draw the line with your younger adult child

It’s hard to say no to your own child when they’re asking for help. But enabling a child’s dependence on you can weigh on you financially and emotionally. In fact, according to an Ameriprise survey, about one-third of Americans ages 30 to 69 with at least $100,000 in investable assets have or would delay their own retirements to pay for their child to go to college.

Before you hand over the cash, ask yourself if you are helping them become more independent or are you allowing them to stay stuck—and if you can truly afford the gesture. In some cases, learning to say “no” is the better choice in the long run, for both you and your “launching” child.