Help Your Adult Children Take A Step Toward Financial Independence

Shot of two men working on a project together at home

Help Your Adult Children Take A Step Toward Financial Independence

Some of the biggest lessons your child may learn happen when they’re entering adulthood and getting ready to live independent lives.

In a 2019 Pew Research study, most Americans say 22 is the ideal age for young adults to achieve financial independence. But in reality, only around one-quarter of 22-year-olds can make that claim. Between uncertain job prospects, rising housing costs and student loan burdens, financial independence may seem a long way off for many young adults. As a parent to one, you still have many life lessons to impart to your adult child, especially around managing money.

Define what financial independence means. Achieving financial independence can mean different things to different people, even within families. So parents and children should get on the same page about what financial independence looks like. It could be living without debt or moving out of the family home or landing a job that becomes a career.

Encourage saving from an early age. Even when money is tight, your adult child should plan to put some earnings aside for future needs. It’s important to establish an emergency savings account, because surprise and unplanned expenses always come up. Contributing earnings toward retirement is also wise, even at a young age—it helps establish good savings habits and harness the potential of compounding returns over time.

Practice what you preach. You’ll find it hard to maintain credibility if you don’t follow your own advice. If you want your child to be frugal or live within their means, they should see you do the same. Frugality isn’t all about cutting costs and going without. It’s more about getting the most value from the money you spend and not being wasteful and careless with money.

Teach the basics. Budgeting and managing credit are two areas where most young adults have little experience and knowledge, but you can demonstrate how valuable these skills are for achieving financial independence. Creating a household budget helps your child understand how cash flow works, from the income they earn at work to the outflows of basic and discretionary expenses. It’s also important to teach a young adult the ins and outs of borrowing–how credit cards and other forms of consumer debt work, how interest rates differ, and how to maintain a good credit score.

Pay down debt with financial gifts. Your adult child would certainly welcome one-time financial gifts from parents or other family members, but this money should be used with purpose. Instead of splurging on travel, shopping sprees or expensive toys, your child should use a financial gift to pay down student loans or other debt. If they are debt-free, they should consider putting these gifts into savings or investment accounts, or setting them aside for a down payment on a home of their own.


Thanks for checking out the blog. 

Gregory Armstrong , CFP®



This material is for general information only and is not intended to provide specific advice or recommendations for any
individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive
outcomes. Investing involves risks including possible loss of principal.

This material was prepared by LPL Financial.   Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and
broker-dealer (member FINRA/SIPC). 
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL Financial affiliate, please note LPL Financial makes no representation with respect to such entity.


Securities and insurance offered through LPL or its affiliates are:


Share This Article


You May Also Like

Funding a Buy-Sell Agreement with Life Insurance

As a partner or co-owner (private shareholder) of a business, you’ve spent years building a valuable financial interest in your company. You may have considered setting up a buy-sell agreement to ensure your surviving family a smooth sale of your business interest and are looking into funding methods. One of the first methods you should consider is life insurance.

Read More »

Transferring Your Family Business

As a business owner, you’re going to have to decide when will be the right time to step out of the family business and how you’ll do it. There are many estate planning tools you can use to transfer your business. Selecting the right one will depend on whether you plan to retire from the business or keep it until you die.

Read More »

Retirement Plans for Small Businesses

As a business owner, you should carefully consider the advantages of establishing an employer-sponsored retirement plan. Generally, you’re allowed certain tax benefits for establishing an employer-sponsored retirement plan, including a series of potential tax credits for establishing the plan and a deduction for contributions you make.

Read More »

Creating an Investment Portfolio

You’ve identified your goals and done some basic research. You understand the difference between a stock and a bond. But how do you actually go about creating an investment portfolio? What specific investments are right for you? What resources are out there to help you with investment decisions? Do you need a financial professional to help you get started?

Read More »

A/D Juicebox Ready, Set, Spring! (April 10th)

W​​​​​​​e are happy to present our A/D JuiceBox Webinar Series. JuiceBox will provide current events, financial planning strategies, taxes, investments, and general business updates.

Join us as Autumn fills the air, and the time is quiet and mellow to discuss things in the financial planning world.

Read More »

Understanding Risk

Every investment carries some degree of risk, including the possible loss of principal, and there can be no guarantee that any investment strategy will be successful. That’s why it makes sense to understand the kinds of risk as well as the extent of risk that you choose to take, and to learn ways to manage it.

Read More »

Don't Miss Anything

Stay up to date with our monthly newsletter.