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Teaching your Children & Grandchildren Financial Responsibility

I am fortunate to have parents that taught me personal finance lessons from a young age. I remember sitting in front of the TV watching the ticker tape roll by as I watched the stock price of IBM and Disney, stocks that my mom owned at the time. Flash forward 15 years, as a freshman at College Park, I distinctly remember attending football games and being aggressively offered a free t-shirt from a representative at a Capital One table.

To get the free t-shirt, all I needed to do was fill out an application for a credit card. Fortunately for me, I already had a credit card to use for necessities such as gas and groceries, and more importantly, the extra-large t-shirt wouldn’t fit my 135-pound skinny frame!

Many young adults make their first money mistakes in college when they sign up for these credit cards, not knowing what that piece of plastic entails and the years of financial ruin they could create. I know too many friends who didn’t realize how that card and the high interest that came along with it could haunt them for decades to come. Students may have no clue about a budget or saving or investing, and as a parent, it is your responsibility to impart your hard-earned knowledge and keep them from making the same mistakes you have made or seen others make.


As a young adult, you don’t have significant responsibilities or living expenses. Your minimum wage job is sufficient to keep up with your fast-food lifestyle and the cost of going out with friends. As parents, we should give our children or grandchildren the tools they need to be intentional with their spending habits.

As a child, my parents gave me three empty lemonade containers labeled “spend,” “save,” and “give.” These days, there are plenty of phone apps that help us create a budget and track spending. Free apps such as Mint from Intuit can aggregate all accounts, including credit card and investment accounts, and give the young adult in your life a holistic view of their finances. However, all the apps in the world won’t make your child a smart saver or help them understand the purpose of money.

Start by talking to your child frequently about your money values and help them understand what money means to you. Finally, encourage your children to start understanding where their money goes today while at the same time planning for the future.


You never know what life will throw your way, and it is important to stress that to the next generation. My peers and I have seen a technology bubble, September 11th and other terrorist attacks, the Great Recession, climate change, a Dow Jones that dipped below 8,000, and a bear market every three years on average! My money habits are based on these big lessons and the future ones that are sure to come

There are many “rules of thumb,” and for most, saving three to six months in the bank for emergencies or unexpected life events is a smart goal to work towards, but that can seem like an impossible number. Encourage your children/grandchildren to save a portion of their income every month until they build up that emergency fund. Make it a manageable process and not an overwhelming task. Once they have a fund for emergencies, they can focus on taking risks and saving for the long term.


With the advent of apps like Robin Hood, Coinbase, and a nearly endless stream of new investment apps on your Facebook feed, investing is as easy as reaching for your phone. But do your

children/grandchildren know the fundamental mechanics behind investing? Do they know how to build a properly diversified portfolio or what that means? Many of us have learned how to invest in the future by making our own mistakes (I sure have). I worry that apps such as Robinhood gamify investing to the point that it is dangerous. There are countless stories of young adults or teenagers recklessly investing using leverage or buying investments with no tangible value.

It is more important than ever to teach our children about the risks in investing and having a purpose in mind. The book The Millionaire Next Door is a timeless lesson that teaches that becoming wealthy has more to do with values and spending/saving habits and less to do with picking the best investment. We should encourage our children to take risks in their careers while they are young to earn a higher income in the future.

Growing up, personal finance was never taught in schools. While it may be taught in some school districts today, the academic tilt doesn’t truly help prepare our children for managing money in the real world. Money lessons are most impactful if they learn from you and your mistakes. If you need help having the money talk, I can help, reach out, and I am more than willing to walk the young adults in your life through their money journey.


Financial Planning is not just about managing investment portfolios. More importantly, it is about having someone you trust to guide you when the unexpected occurs and to make sure your family has a trusted resource to rely on.

At Abel Financial Management, we are local, family-oriented, and truly independent financial planners with a mission to help you make smart decisions with your money. If you or someone you know faces decisions like these, we invite you to have a conversation with us.

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