Our clients frequently ask how they can give meaningful financial gifts to their children as they enter adulthood. With their own financial situation established, some parents want to make gifts to their children during their own lifetimes, preferring to see and enjoy the effects of their gifting with their own eyes. At the same time, some children may be less financially responsible than others. One impactful way you can gift to your kids is to give them the gift of financial planning.
Learn More: What You Need to Know Before Giving Money to Family Members
The Importance of Financial Planning in Early Adulthood
Many young adults have not accumulated enough assets or income to hire a financial advisor in their own right. Still, they could benefit from the knowledge and expertise that working with a financial advisor can provide.
Early adulthood is a pivotal time, marked by significant transitions such as starting a career, managing student loans and making major purchases. Having a financial plan earlier in life may make a considerable difference. Understanding where their money goes and how to allocate it wisely can help young adults avoid common financial pitfalls. Developing a budget to manage income and expenses, knowing when and where to save, navigating job changes and protecting their assets are essential elements in building a secure financial future for themselves. I often allude to having a financial plan as being similar to using a map app on your phone.
How Financial Advisors Can Guide Young Adults
As someone who grew up in the Midwest, I frequently take long road trips. It’s just part of the culture. The farther away your destination, the more options and time you have to take a different route. Even if you have a good idea of how to get there, it’s worth the effort to plug the destination into your map app and see what to expect along the way.
Many of us remember using paper interstate and highway maps to plan our route to a new destination before we upgraded to mapping and directions tools like MapQuest. These online tools were game-changing for road trips. The old paper maps gave us a point-in-time plan to get somewhere but they didn’t adequately factor in road closures, traffic and lingering construction along the route.
A financial plan is dynamic, just like using a map app. Working with a financial advisor to develop a personalized plan can help you determine your destination (i.e., early retirement or budgeting for a future family) and give you an idea of how long it will take to get there. An advisor can help you decide which of the many possible routes is your best option to get there, and help you navigate the roadblocks and traffic along the way, in real time.
Much like a mapping app that shows you when you can get off the main freeway and cut through town to shave some time off the trip, a financial plan may help you plan for hazards on the road ahead and helps you protect yourself against them.
Navigating Life’s Unexpected Detours With a Financial Plan
Sometimes you need to make detours in life. Whether these detours are intentional (home purchases or having children) or unintentional (medical emergencies, job changes or large expenses), they will impact your trip. No matter the reason for the detour, having a financial plan can help young adults navigate these challenges with confidence and resilience.
Regularly reviewing and updating your financial plan can help young adults adapt to changing circumstances and make informed decisions about their financial future. The guidance and experience of a trusted financial advisor can help you take those detours and return to the main trip efficiently without derailing the entire ride.
Make Financial Planning an Accessible Gift for Your Children
As we age, many of us realize that we enjoy giving gifts more than receiving them. Thoughtful gifts at holidays and birthdays often have a more lasting impact. Gifting financial planning services to your children can be a meaningful and lasting gift. It empowers them with the knowledge and skills needed to manage their finances effectively, setting them up for a lifetime of financial success.
To make financial planning accessible, consider introducing your children to a trusted financial advisor or enrolling them in a financial literacy course.
Investing in your child's financial education equips them with knowledge and tools to navigate the complexities of adulthood with confidence. This thoughtful gift could likely benefit them in the present, helping them to set and achieve financial goals, and often times have a lasting impact on their financial well-being.
