By: Amy Nickson
Raising a child is challenging, especially when you’re a single parent. You have to inject all the good lessons in your child while maintaining financial stability for the family. The challenge becomes harder when it’s time to transition. However, the journey is interesting because you learn so many new things while raising a child on your own.
All Grown Up!
The first major transition comes after your kid completes high school. Young adults like to declare financial independence once they get their first job after completing their studies. They would like to move out of their parents’ house to start their own financial life. Declaring financial independence is good, but little do they know, this transition period can be challenging for them.
Tough Times Don’t Last Long!
They will face difficulties while managing their own finances. Managing bills on their own can be exciting, but the task can be difficult if they don’t know how to do it correctly. Earning money can make a child overconfident which causes them to make mistakes. As a single parent, feeling anxious is normal. But, don’t panic!
Things to Think About
What should you do to help your children during this transition period? Who can better guide a young adult than you? Below are some tips on how you can guide your youngster who is dreaming to announce financial independence and move out of the nest.
- Sit with your child and discuss the upcoming changes he/she is going to face. As a parent, guiding an adult child is probably a challenging task. However, you must accept the fact that your children will move out to live their own lives and face their own challenges.
- As soon as your child completes high school or college, you should talk to him/her. Try to know your child’s plan. For example, your child will have to be gainfully employed to support himself/herself. While living independently, your child should be responsible for his/her own utility bills, student loan payments, and groceries.
- Teach your child why budgeting is important and how it can be fun! It is to be expected that your adult child may not want to follow a budget. Some children agree that budgeting is difficult and complex. Explain how a budget helps them to formulate a plan to pay down debt. Give your child the following budgeting tips:
- List all expenses including the smallest expense.
- Adjust the budget from time to time and make the necessary changes.
- Eliminate unnecessary expenses.
- Save a certain amount every month for emergencies.
Don’t Ignore Debt!
Your children may be eager to declare their independence once they start earning money. But tell your child that getting out of debts is the true path to independence. If they overlook their debts, they will never be able to secure their financial future. If your child has a huge student loan, they should make arrangements to pay for it! If your child is unable to manage the monthly bills, then you can suggest bill consolidation to make the payments affordable.
It is quite normal to worry about your child’s new life. Get a complete picture of your child’s financial ability before he/she leaves your place to live independently. Remember, your child can also suffer from the separation anxiety when he/she has to live independently. Explain that living separately doesn’t mean the end of the relationship with you. Parents can offer guidance and support.
Teach Your Child How to Manage Finances Like A Pro
Teach your child how to grow a savings account, emergency account, and to invest. You should also tell your children about the importance of insurance. Explain how emergency savings plays a crucial role in financial independence. Emergency expenses can arise anytime and if their income can’t manage the situation, it can ruin their financial life. Ask your child to save at least 3 months of savings in an emergency account to avoid any emergencies like job loss, accidents, or illnesses. You should also tell your children to open a retirement account as soon as they start earning money.
Lastly, to help your adult child to become financially responsible, be a positive role model. Children always imitate their parents. Once they observe a financially responsible parent, they will try to become responsible. Set examples and display good financial habits and kindness like saving money in a piggy bank, donating money to the needy, keeping a shopping list, and discussing financial problems with family members. Start teaching your children financial responsibility while they are young!
For more financial tips from Amy, click here!