Millennial Money: Teaching Your Children How to Manage Their Finances

Bridget Handke, CFP®, CAP®
Sep 19, 2018 10:47:55 AM

millennial moneyI have two millennial daughters and even though they have grown up with a financial planner for a mom, I realize they don’t know as much about money as I’d like them to.  I still have more I could teach them!

If your child is a millennial (born 1981-96), you may worry that they don’t know enough about finances. In fact, a quarter of millennials only have a basic understanding of how to manage their money1. Even if your child doesn't think they need any advice, chances are they could use a little more guidance. Here's how you can break the "millennial money barrier" and give your child the information they need.

  • Recognize that millennial money is different.  

My oldest was lamenting about how challenging it is to make ends meet and was starting to berate herself when I cut her off. Things are different now then when we graduated college. Back then, almost all post college jobs were full time with a regular salary. We had health insurance and didn’t have to pay a premium cost – let alone save for a $3,000 deductible. We had vacation days, sick days and holiday pay.

Many Millennials graduate college and work temporary or part-time to start. If they don’t work, they don’t get paid. It’s much harder to makes ends meet, let alone save money when you are paid less. These challenges make it harder now than when we were their age. Recognizing that can help keep your judgement in check when discussing money with your child.

  • They didn’t learn to manage money in school.

Managing personal finances is so important to accomplishing your goals, as well as reducing stress levels that you would think that it would be taught in schools. For the most part, it’s not. Whatever they’ve learned they’ve learned from you or from their own research. If you didn’t teach them they could be floundering. Even if you did teach them, it might not have “stuck”. It’s hard to learn and remember something that isn’t immediately relevant. If you taught them about debt and retirement when they were in high school, they have probably forgotten it. If your child is in college or working their first job, money management may be relevant for them, and they may be more receptive to learning.

  • Be sensitive to how you are coaching them.

Many Millennials, who are currently 22 to 37 years of age, won’t like to be told what to do. Heck, I don’t either! So instead of telling them how to manage their finances, you could tell them how you did it when you were their age, what mistakes you made, and how you wish you had done things differently. Then you could move into the good things you did that you are really grateful for now.

If you think it would resonate more if their financial coaching didn’t come from you, you could set them up with a meeting with your financial advisor. This is something we do in our firm. We find Millennials appreciate financial advice coming from someone who loves what they do. The fact that it’s not Mom or Dad is a bonus. Our meetings are confidential so a Millennial can ask us questions without Mom or Dad judging why they are asking.  

Along those same lines you could give them resources such as the book Coin, by Judy McNary, which is an irreverent book that teaches the basics of money management.

  • Let them feel the pain.

Do you suspect your child is spending money frivolously or not taking saving seriously? Consider not bailing them out. Let them feel the pain of paying credit card interest or being late on rent and having to pay a late fee. The real world consequences may be a better teacher than if you step in to save them.

  • Incentivize them.

If you would love to see your Millennial set up an emergency fund, save more for retirement or pay their student loan down faster, you may consider implementing a matching program. For every dollar they put into a Roth IRA, you’ll put in a dollar.  

Like many challenges in parenting, open communication is fundamental in discussing topics like money, which can be very personal.

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