Like every parent, you want your children to become happy, self-sufficient adults. But once childhood, adolescence, and college are over, what happens next? How do you guide your kids to become financially independent grown-ups who are able to navigate the ins and outs of budgeting, paying the bills, and saving for their own futures?

While you may have the means to help support your adult children without impacting your own financial situation, you still want to make sure you don’t enable them so much that they cannot thrive financially on their own. If you’re paying for your adult child’s credit card bills, mobile phone, or loans, you may want to set up a plan for them to start taking over the payments themselves. Helping your kids to be responsible for their own expenses can empower them to be successful in the future.

Our advice is to expose children early on to the concept that finances are a fact of life and not shield them from its pitfalls. That way, when they become young adults they can make decisions that are relevant to their age group.

Here’s a summary of some of the advice we offer to parents who want to help launch their adult children to financial freedom.

Suggest they Create a Budget

A written budget that delineates the money that comes in and the money that goes out can help them clearly see what expenses are necessary and what aren’t. It can be basic or detailed but should address all sources of cash inflows (income) and cash outflows (expenses, taxes, and savings). Having a few months of credit card and bank statements handy when creating a budget can help them to see exactly where the money is going and empower them to make better spending decisions. You can download a basic budget form here.

A budgeting exercise can be extremely helpful to gauge how to “make ends meet.” It can be easier to make choices if they can distinguish between fixed expenses (housing, loan payments, etc.) and discretionary expenses (travel, entertainment, etc.).  Once they have identified fixed expenses and set savings goals, they may find it easier to establish more self-discipline to say no to some of those daily temptations that have a way of consuming cash flow!

Tell Them to Save for Retirement ASAP

The best advice we can give regarding retirement is to start saving early. Take a look at the chart below:

Invest $300/mo to age 65 starting at different ages

Annual rate of return Age 25 Age 35 Age 45
5.0% $457,800 $249,700 $123,300
6.5% $685,000 $332,000 $147,100
8.0% $1,047,000 $447,000 $176,700
Total Invested $144,000 $108,000 $72,000

If your child saves $300 a month starting at age 25 and receives a 6.5% annual rate of return compounded monthly until they’re 65, the $144,000 they save will grow to $685,000 by the time they’re ready to retire.

Recommend they Participate in their Employer’s Retirement Plan

If your child is employed and eligible to contribute to a 401(k) plan, advise them to take advantage of it. Once they have enrolled, they can designate what percentage of income they’d like to defer into the 401(k).  In addition, their employer might also “match” a portion of their contribution up to a certain percentage. Your child should strive to contribute at least as much as necessary to maximize that employer match.

If your child doesn’t have access to a 401(k) plan through their employer, they can use an IRA account to help them save for retirement. They can contribute $6,000 annually to the IRA and invest to grow their savings either tax-deferred or tax-free, depending on the type of IRA.

With a traditional IRA, they will be taxed on the growth in the account when they withdraw the money at or near retirement.  With a Roth IRA, they contribute with after-tax funds, and future withdrawals will be completely tax-free—provided they are at least 59 years old and have held the account for at least five years.

Recommend they Create an Emergency Fund

We also tell everyone to build a liquid emergency fund in case they lose their job or incur a major expense. Having a cash cushion will enable them to handle it with less financial stress. The rule of thumb for an emergency fund is to set aside at least six months of expenses, and to replenish the fund as soon as possible if it’s used. What’s more, having the money automatically transferred from a checking account to a savings or investment account can help make it easier to save. Online savings accounts often offer a higher yield than a bricks and mortar bank.

Guide them to Resources

Here are some of the websites we suggest:

  • – A free, online service that helps customers to easily manage all their finances in one place.

  • – Enables you to compare rates on savings accounts, credit cards, CDs, mortgages and more.

  • – Provides you with a free copy of your credit report every 12 months from each of the three credit reporting companies to ensure that the information on all of your credit reports is correct and up to date. Reviewing your credit report is an important step to monitor your progress if you have had past credit issues, and it can be an excellent way to detect potential identity theft.

At Modera, we focus on helping our clients manage their entire financial lives, taking into consideration their family situations. To learn more about the ways we can help you and your family, please contact us. 


Modera Wealth Management, LLC (“Modera”) is an SEC-registered investment advisor with places of business in Massachusetts, New York, New Jersey, Pennsylvania, North Carolina, Georgia and Florida. Modera may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. SEC registration does not imply any level of skill or training. For information pertaining to our registration status, fees and services, please contact us or refer to the Investment Adviser Public Disclosure web site ( to obtain a copy of our disclosure statement set forth in Form ADV Part 2A. Please read the disclosure statement carefully before you invest or send money.

This article is limited to the dissemination of general information about Modera’s investment advisory and financial planning services that is not suitable for everyone. Nothing herein should be interpreted or construed as investment advice nor as legal, tax or accounting advice nor as personalized financial planning, tax planning or wealth management advice. For legal, tax and accounting-related matters, we recommend you seek the advice of a qualified attorney or accountant. This article is not a substitute for personalized investment or financial planning from Modera. There is no guarantee that the views and opinions expressed herein will come to pass, and the information herein should not be considered a solicitation to engage in a particular investment or financial planning strategy. The statements, information and opinions expressed in this article are subject to change without notice.

Investing in the markets involves gains and losses and may not be suitable for all investors and should not be considered a solicitation to buy or sell any security or to engage in a particular investment or financial planning strategy. Individual client asset allocations and investment strategies differ based on varying degrees of diversification and other factors. Diversification does not guarantee a profit or guarantee against a loss.