June 09, 2021
From the first diaper to college tuition, children have endless financial implications for growing families. As an advisor, staying on top of what those concerns are, and helping your clients navigate them, is paramount. Here are just a few of the top financial concerns that keep your Gen Xer and millennial clients up at night other than a screaming infant:
- How should our family’s budget change?
- How will we handle day care costs or the decrease in our family income should one parent decide to stay home?
- What will our new medical costs look like?
- When should I start a savings account for my child?
- How should I talk to my kids about money?
- How can I start saving for my child’s college education?
These types of questions are why people have financial advisors. Any advisor worth his or her salt should be able to guide new parents over these common hurdles. However, while an advisor can provide guidance on some really tough issues, understanding the unique set of financial challenges today’s parents are experiencing can provide new insights.
To help, here are some financial tips for parents:
Don’t worry about the wrong things
In today’s world of Pinterest boards and mommy blogs, it is easy to get caught up worrying about nursery décor and Halloween costumes. The world of social media puts a high premium on image yet, somehow, financial planning for children doesn’t usually hit Facebook feeds. For clients parenting young kids, recommend that they try to elongate their vision of the future. While there is a time and place for frivolous spending and maybe even some spoiling, encourage them to focus their energies further out on the horizon. While a seven-year-old might wish she were getting another American Girl doll, her 18-year-old future self will be grateful for a properly funded college savings account.
You are your child’s first financial planner
Financial planning starts at home. Whether it’s simple budgeting through monthly allowance or explaining how credit cards work, parents set the stage for a lifetime of financial decisions for their children. For generations past, it was considered taboo to talk about money with the kids. Most baby boomers remember growing up in a house where they didn’t know the financial stresses (or successes) of their families. Many of today’s Gen Xer and millennial parents are involving their children in financial discussions at very young ages. Some parents are even bringing their children to meetings with their financial planner to get them exposed as early as possible.
Don’t always be your child’s safety net
This one is tough – especially for today’s generation of parents. While boomers were given the label of “helicopter parents,” Gen Xer and millennial parents have taken monitoring their children up a notch – sometimes they’re referred to as “Black Hawk parents” – and will supervise their children’s social media interactions, classwork, and work lives, even after they have left the home. However, when it comes to finances, never letting a child fail could be a mistake. Feeling the consequences of bouncing their first check or having a credit card denied could save your client’s children from much more painful lessons in the future.
Parenting doesn’t end when your child turns 18
Many of today’s parents feel like they are only at about the midway point of their parenting journey when their child turns 18 (and perhaps just starting to climb uphill). As your clients begin to plan financially for kids, advise them to think beyond diapers, soccer uniforms, and college textbooks. Many parents today are still shouldering at least some of the financial weight of their children well into their mid-20s.
Bottom line, parenting is no cakewalk – especially as it relates to finances. And while it’s never been easy, your Gen Xer and millennial clients face a multitude of new challenges that others have not had to deal with before. Luckily, there are resources for these challenges. Whether it’s turning to you for financial guidance, doing some research on their own, or listening to the advice of other parents, perhaps the most important thing you can remind them of is not to feel like they have to do it alone.