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Money Smart Kids

Money Advice for Millennials

Here's how parents can help their adult children learn to manage their finances.


My son Peter, who just turned 26, recently sent me the following e-mail:

“Saw this Kiplinger tweet: ‘FYI: Carrying a $1K credit card balance at 18% blows $180/year on interest that you could put to better use elsewhere.’ I was wondering: Wouldn’t carrying $1,000 at 18% be $180 a month? Or is the 18% an annual total, so it’s only 1.5% a month? I’ve never paid interest.”

SEE ALSO: 10 Financial Commandments for Your 20s

I assured Peter that 18% is an annual rate, and I congratulated him on never paying interest (see How to Get Your First Credit Card).

A few days later, I got another e-mail from Peter:


“Do you know anything about I recently signed up and it seems pretty useful. Aggregates all your financial accounts on one page for easier monitoring.”

Yes, I told Peter, is Kiplinger’s choice for the best budgeting Web site (see How to Stretch Your Money).

Peter’s recent move into new digs prompted yet another question: “How much of my income should I be spending on rent?”

Answer: Kiplinger recommends that he spend about 35% of his after-tax income on housing (see How to Divvy Up Your Paycheck).


I guess you know your kid is really growing up when he stops asking you for money and starts asking you how to manage his own. Parents need to realize that teaching kids about money doesn’t stop with giving them an allowance or helping them open their first savings account. They need your guidance even more as they get older.

But young adults say they aren’t always getting the help they need. On average, two-thirds of millennials in TD Bank’s Financial Education Survey said they wish they had been better prepared for the financial implications of major life events, such as going to college, starting a new job or having a baby. And 22% say they are under “extreme financial stress.”

In Fidelity Investments’ Millennial Money Study, 39% of those responding said they worry about their financial future at least once a week. Women tend to be less confident than their male counterparts; 19% of Generation Y men said they never worry about their financial security, whereas only 2% of Gen Y women said the same.

Trustworthy advice. When young adults need financial help, surveys consistently show that they’re most likely to turn to family and friends. Asked in the Fidelity study who they trust most for information about money matters, 33% cited their parents -- the top choice. Further, 59% consider their parents to be good financial role models, and 76% said they don’t have any difficulty starting conversations with parents about saving and investing for the future.


Nevertheless, nearly half admitted they don’t receive financial advice from their parents. And almost one-fourth said they trust “no one” when it comes to advice about money.

Seems to me what we have here is a failure to communicate -- and possibly a crisis of confidence among parents who feel ill-prepared to offer financial counsel and adult children who are gun-shy about asking. But neither generation should find the subject intimidating. As Peter’s questions indicate, the advice kids crave is often straightforward, and the answers are easy to come by.

For starters, I’d suggest Kiplinger’s Personal Finance magazine and as trustworthy sources (see our regular Starting Out column and our special guide for new grads and young professionals). We’re also happy to recommend other sources and tools, such as and LearnVest . If you feel you need in-depth financial or investment advice from an outside source, see Best of the Online Investment Advisers or Financial Planners for Young Clients.

And for a complete package that covers everything from credit to retirement, see Kiplinger’s Starting Out Guide to Your Money ($2.99 from the Kiplinger store). Peter asked for a copy of that, too.

Next: How not to help your adult kids.