Teaching Financial Literacy to Adult Children: Passing on Money Management Skills

Mother and adult daughter sit on couch looking at phone and smiling.

Passing money management knowledge from generation to generation has been an important value for decades. But where do you start?

Whether you intend to leave an impactful financial legacy or are decluttering your own finances, passing money management skills down to your children can be a key way to show care and concern. Let’s delve into five tips for managing money skillfully as an adult.

Handle Life Insurance Sums

One important topic to cover with your adult children is strategically managing a life insurance payout. Having a conversation about ways to manage this sum could greatly affect the impact it has on your family’s life.

Discuss what it would look like to put the sum in a savings account versus investing. Offer considerations like education goals, debt payoff goals or savings for retirement. Having this conversation could offer a sense of great care and concern for your children while giving them a great jumping-off point to make confident financial decisions later in life.

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Estate Planning

Teaching principles of estate planning to your adult kids is another important money management lesson. What is estate planning? Estate planning is the process of determining beneficiaries and designating who will inherit your assets. It can encompass many details including tax implication plans, guardianship details and other directives.

Establishing an estate plan can help save beneficiaries time and fees and is an effective tool in financial management. Consider sharing your estate plan with your children and demonstrate the importance of creating their own.

Reduce Credit Card Debt

Managing credit card debt is another crucial financial management tool. Knowing how to effectively manage debt can help individuals avoid fees, overspending and financial stress. Mastering the basics of paying off credit cards monthly, slowly paying down debt and mitigating usage are all fundamental elements of money management.

Consider chatting with your adult kids about their current credit card usage. Possibly share your experience with credit cards and how you reduced debt. Introducing concepts like the snowball and avalanche methods, to knock out debt fast, can be great foundations to keep in mind.

Thrifty + Save Essentials

Thriftiness can offer vital elements to an individual’s financial landscape as well. It can be a significant tool in times of economic uncertainty, attaining financial goals, finding strategic solutions to grow wealth and more. Whether it’s finding ways to save at the grocery store, on gifts or clothes thriftiness can be used systematically to benefit a financial plan. Keeping this in mind as one way to master money management can be a financial secret weapon.

Net Worth

Knowing your net worth is our last tip for mastering money management. Net worth equates to your assets minus your liabilities. As debt reduction efforts progress, your net worth increases, creating more wealth to share with generations to come. Sharing this knowledge with adult children can help give perspective and tools to feel in control of their finances.

For more tips on how to start discussing finances check out this post: How to start talking to your kids about money at an early age

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