5 Financial Tips to Pass Along to Your Grown Kids

Filed under: Financial tips

Grandmother With Mother And Adult Daughter Relaxing On SofaOnce your kids graduate college and venture out into the world, they don’t exactly need you to hold their hands while crossing the street anymore. But that doesn’t mean they don’t need your guidance, especially concerning more “adult” topics like planning a family, taxes, career decisions, and financial planning.

You’ve accumulated quite a bit of wisdom in your life, and hopefully your kids can benefit from that knowledge. As you continue to guide your adult children through this next phase of their lives, share these financial tips with them.

Start saving for retirement right away. All financial planners agree on this issue. Even if you can save only a small amount from each paycheck, that money carries the potential for significant growth over the next three or four decades. So start saving for retirement in your twenties.

Your retirement savings plan can help you with income taxes. There are two basic structures for retirement funds. A traditional account allows you to save pre-tax dollars for retirement, and reduce your income tax liability at the same time. A Roth account is funded with after-tax dollars, so it won’t reduce your income taxes now. However, the withdrawals are tax-free in retirement, helping you to manage your tax burden at that time. You should choose the method that offers the greatest tax benefits overall, keeping in mind that some people switch from funding one type of account to another, or even elect to fund both types.

A health savings account is a good option for young people. When you’re young and relatively healthy, a low-premium, high-deductible health insurance plan is a tempting option. But of course, if you incur significant medical expenses that large deductible can suddenly seem like a bad idea. A health savings account (HSA) allows you to save pre-tax money to be used toward qualifying medical expenses. If you don’t use the funds in your account, they are rolled over each year – potentially all the way into retirement.

Young people need insurance, too. Life insurance is not just for older people. In fact, as you build your adult life, including a spouse, kids, and mortgage, a life insurance policy is essential to protect them from the worst-case scenario. Likewise, disability insurance offers much-needed income in the event of a disabling illness or accident.

Expert guidance is key. It’s easy to make a costly misstep with regard to finances, simply because you didn’t know about a particular opportunity. Working with an experienced financial professional can be the best way to identify all opportunities and potential problems. So make an appointment with a financial planner to get started, and continue to meet with them regularly throughout your career.

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This information has been provided by a licensed insurance professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting the insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax, trust and estate, or investment advice. Infinite Wealth Advisors is not an investment advisory firm.  Investment Advisory Services provided by NAMCOA® – Naples Asset Management Company®, LLC, a federally registered investment advisor, website: www.NAMCOA.com .