Tips for Talking to Young Adults About Money
No one is born knowing how to handle their money and personal finances. We learn these skills over time, through trial and error. There’s no doubt money mistakes can be great teachers, but they’re not the only way for young adults to learn. You can play a part by modeling positive financial habits and regularly talking about financial issues.
Whether you’re sending them out on their own for the first time or they’ve come back to stay with you, here are several topics to cover when talking to young adults about money.
Saving for Emergencies
We’ve all heard how young people think they’re invincible and nothing bad can happen to them. Of course, the reality is that emergencies have no age limit. One of the most important things you can talk about with young adults is the importance of saving at least 3 months of living expenses for emergencies. The sooner they can adopt a “pay yourself first” mentality, the better. Explain that by starting to save for emergencies now, they will have that money waiting when they really need it.
Planning a Budget
Following a budget is a necessary financial skill for all young adults trying to make ends meet on entry-level salaries. Fortunately, there are countless budgeting apps that make it easier than ever to track money coming in and going out. Since they’re on their phones a lot anyway, using it as a tool to track spending and manage a budget makes perfect sense. And if you’re not already following a budget yourself, it’s the perfect time to start so you can practice what you preach.
Whether it’s student loans or credit cards, many young adults take on debt without fully understanding the responsibilities and potential consequences involved. Explain that debt isn’t to be taken lightly and how being in debt can slow their progress toward pursuing goals like owning a home or getting married.
With takeout food, transportation, and countless other services just a few taps away, it’s easy — and expensive — for young adults to rely on others to take care of basic needs. Teaching them self-reliance and basic life skills such as cooking, house cleaning and doing laundry will not only save them money, it will help them evolve into well-rounded adults who can take care of themselves.
Planning for the Future
When young adults are just starting out and making it paycheck-to-paycheck, it’s understandable to not focus on the future. That’s why it’s important to talk to them about their plans and goals. They don’t have to have an ironclad plan in place. But having an idea of what they’re hoping to accomplish in the coming years will help them set realistic savings goals and give them something to work toward. Be sure to talk about things like owning a home, moving to a new city, getting married and even starting to save for retirement.