The Secret To Raising Financially Independent Kids

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Failure to launch is one of the biggest secret fears of every parent in America. This is where, in spite of all your best efforts, your children end up becoming incapable of supporting themselves financially when they reach adulthood.

One parent, Andy Byron, used to be terrified of this. Having five children, the fifty-seven-year-old financial planner who hails from Pleasanton, California, did not want to contemplate the idea of having thirty-year-old adults residing in his basement.

So, with the help of his wife, he set about turning the house into a factory for manufacturing financially independent kids. The first-born, a girl, teaches the English language while the twin boys, who are 26 years old, are employed by PricewaterhouseCoopers and Apple. Another son, a 22-year-old, landed a paid internship with Stryker Corp, a company that builds medical devices, and he is working towards a career as a medical salesman.

They also have a 19-year-old daughter who will be a college sophomore this fall. She is blending her studies with a summer internship and during the school year, she works part-time as an accountant.

So what is the recipe for their success?

Byron asserts that the key to his children’s success is starting early, being consistent throughout, and always ensuring that they are aware of their responsibilities.

When they reached ages 16 and 17, the Byron kids were informed by their parents that they needed to get jobs because they would have to fend for themselves after graduation. Consequently, the three oldest children have moved out of the house and are now financially independent. Soon, the other two will follow the example set by their siblings.

The Byron family seems to have worked it all out, it is not an easy feat to ease children out of the nest. Studies conducted by the Washington-based think tank Pew Research Center have found that a staggering 73% of people in their 40s and 50s who have adult kids reveal that they have provided financial assistance to their children over the last year.

It may be useful to ponder if the success of the remaining 27% was as a result of long-term, deliberate strategies to teach children about managing finances or the outcome of tough love where the kids were thrown into the deep end and forced to swim.

According to Sally Koslow, author of a parenting book called ‘Slouching Toward Adulthood’, the success was due to financial education combined with having talks about money with the kids. She adds that most parents do not talk about money with their kids, and the topic is basically taboo.

For parents of kids who have not launched yet, there is still time. The following tips can help you to prepare children for real financial independence as they go through college and during the crucial years that come after.

Ensure That You Lead From the Front

If you do not wish to see your children teetering on the edge of financial ruin, make every effort to ensure that they are debt-free when they graduate from college. According to Project On Student Debt, an advocacy group,70 percent of college graduates last year owed $29,400 on average. To assist them to avoid being enslaved by debt later in their lives, begin saving when they are still toddlers.

The Byrons put in a minimum of $50 each month into 529 education savings plans for all of their five children, starting from the moment each one of them acquired a Social Security number.

Byron complemented this bold strategy by strongly urging their young adults to attend in-state, public universities. The outcome was that the students graduated from college free of student debt, which set them on their way to becoming financially independent.

Recruit a Wing Man

‘Girls’ was a popular HBO TV series that was based on Lena Dunham’s character being cast adrift, financially, by her parents.

That can be agonizing for everybody involved, but necessary nevertheless. Matt Curfman of the Richmond Brothers, a financial advisory firm based in Jackson, Michigan, asserts that because parents become so emotionally involved, he is happy to assist in the process, even if he ends up being the bad guy.

But Curfman cautions that the process needs to be gradual. If your child gets into financial trouble, formulate a concrete plan to assist with a specific amount of money for a specific number of months and then stop.

Start Their Financial Schooling at Home

Children are taught a lot of things in high school and college, but often the curriculum does not have enough material about personal finance.

This is where parents need to come in and make themselves a vital resource. Annie-Rose Strasser, a 24-year-old, states that home instruction played a critical role in ensuring that she becomes financially independent. Strasser works full time as a journalist in Washington, living in her own apartment. She notes that she learned everything she knows about personal finance from budget balancing, saving and even 401(k) retirement plans from her parents.

Combined with the financial homeschooling was the hope that Strasser would start working as soon as she could. And indeed her stream of jobs at summer camps paid internships and office jobs would lay the foundation for her successful launch.

Strasser notes that her parents were not the happy-go-lucky types who leave their children to their own devices. Instead, they put a lot of emphasis on teaching her to get a career, save money and become financially responsible.

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