Ensuring your children achieve financial independence
This article gives parents and children some tips on how their children can achieve financial independence. By doing so, parent’ have the financial freedom to focus on their own wants and needs. This article is by Harshhaa Garg who has written several books on finance including “Get Rich This Year Framework”.
Too often younger people rely on their parents for money. But is financial help from your parents an economic necessity? Should parents cut off their children from being financially dependent when they reach 18?
Moving from financial dependence on your parents to financial independence is a big goal for many. However, many struggle to achieve this step.
Fifty five percent of parents in India and 30% of parents in the UK support their adult children financially on a regular basis, according to a HSBC report from 2017. Another report also claims that 50% of young Australian adults live at home and in the US, nearly half of “empty nester” American parents still provide financial support to their adult children.
The parents perspective: Many parents are uncertain as to when to cut financial support, particularly following periods in which their children are coping with the challenges of young adulthood and transitioning into professional life.
If your children can achieve financial independence, you can use your resources on your own life journey. It will give you the joyful treat of watching your children become mature contributing members of the family.
The children’s perspective: Often, there comes a point where children want financial independence from their parents. However, they still continue being dependent for the ease of life they are used to. To choose otherwise would be like choosing to jump off the cliff.
No matter how much both parties want children to achieve independence, most people fail to achieve this because the desire to be independent is mostly found to be in conflict with other desires, such as perceived emotional needs. The whole process complicated.
Here are some steps for parents to take that could help their children achieve financial independence:
1. Ensure children include in their budget what is expected as a contribution to the household. Doing so can help children get into the habit of making that monthly payment.
2. Clearly communicate your expectations as to when children should plan on moving out and the steps that should be taken to becoming financially independent.
3. Help your children distinguish their wants from needs.
4. Be calm when your children make money mistakes; let them learn and develop strong money wisdom.
5. Talk about career plans, especially if your children have studied and acquired a great education. Engage in conversation so that your children plan for a financially rewarding career.
Here are some steps that children can take to achieve financial independence, to stand on their own two feet and fully make their own decisions:
1. Take responsibility for basic life skills such as learning to prepare your own food, cleaning up your own possessions and doing your own laundry.
2. Understand the difference between price and value. Practice living frugally. This means living with the principle of getting the most value from your money.
3. Build a budget so that you live within your means. Live by using earnings only.
4. Contribute to the family chores, especially if you are sharing your parents’ home.
5. Ensure that the process of achieving financial independence is a two-way process. Involve your parents when you are on the path to achieving financial independence.
It’s not going to be easy, but the rewards for everyone involved are tremendous. It’s a new level of freedom for all parents and children.
Cheers to you becoming an Asset to the nation!!!
For more information contact Harshhaa on https://www.linkedin.com/in/harshhaagarg/.