Children. No two are alike. Here are five things to help them (and you) stay on track, both in finances and in everyday life.
- Review Income Sources
Does your child receive an allowance? Does she receive a regular paycheck from an employer outside of your home? Is she selling items online at eBay or Etsy? Regardless, as a parent it is imperative for you to stay involved in how your child manages her money. Saving, investing, spending, and contributing are all key variables related to income. These four buckets never go away. This is a great opportunity for her to learn how manage her money wisely. The result is a great foundation for the rest of her life.
What work does your child do—either outside of your home or under your watchful eye? It’s never too early to teach accountability. Whether it's chores, a job at school, helping around the neighborhood, or a job for which she receives a regular paycheck, it’s important that your child is clear about her expectations and what she wants to take away from the experience. Often money is the driving factor. However, gaining responsibility is just as important.
- Bank and Investment Accounts
Does your child have a bank account? She should. And a 529 College Savings Plan? And an investment account, too? The earlier your child learns about our banking and capital structure, the better off she is. Her bank account should be her go-to account for savings and spending. You can help her college aspirations by socking away money in a 529 plan. Don’t keep this plan a secret! Tell relatives that contributions make great birthday and holiday gifts. And let her know the money is there—it can provide added inspiration for college. And there is no reason she shouldn't have an investment account. Some online brokers have no minimum investment as long as you make regular contributions. What about a Roth IRA? If your teen has earned income that is reportable to the IRS, then a Roth IRA is a great opportunity to invest that earned income and allow the earnings to grow tax-free.
- Educational Goals
Children and parents take school for granted: it’s always there. The usual conversations relate to “finding the right fit.” However, consider having a conversation with your child about her immediate educational goals. It could be as simple as passing all of her classes with a specific grade. Or it could be taking a chance on a class outside her comfort zone. Planning for these in advance can help you anticipate other needs, such as a getting a tutor or adjusting time commitments to allow extra study time.
- Extracurricular Activities
Sometimes this is easy. Your talented kid may have a sport or other activity that is near and dear to her heart. But what if she is unclear? Or what if you want to encourage her to try something new and different? Perhaps now is the time to ingrain a sense of volunteerism. One goal as a parent is to prepare your child for a full life: to create opportunities for curiosity, learning and giving. Have a conversation with her about rounding out a life. Your adult child will thank you later on!