How Can I Teach My Children About Money Management?

It's natural to be concerned about your children's financial security, no matter what stage of life they're in. In fact — it puts you in the majority. According to the 2006 New Retirement Mindscape^®study, 61% of people with financially dependant children rank advice to help their children be more financially savvy as their top financial advice need.

It's never too soon to teach kids about smart money management. Once they're in their teens, consider taking them along to meetings with your financial advisor so they can see what it's all about. Above all, set a good example of fiscal prudence.

If your adult child faces financial challenges, it's not too late. It can be hard talking to adult children about their finances, especially if you haven't in the past. But it's worth your effort to help them learn smart financial management now.

Your child's needs and priorities are probably different than yours were. They face a tougher job market, higher educational debt, high real estate costs and increased temptation of easy credit. It's easier to fall into financial trouble.

If your adult child is in financial straits, talk to them honestly. Listen. Don't judge or lecture. Try to understand their views and concerns. Be open about your own past mistakes. Talk about ways to avoid financial pitfalls, from poor investments to credit card debt.

As a parent, your first impulse might be to bail your children out. Instead, use the opportunity to help them learn better money management.

Avoid granting requests that encourage unhealthy dependency on you — like repeatedly bailing them out from unwise credit card debt. Instead, try to help them build sustainable solutions.

Of course, if you're in a position to do so, you may consider helping out with gifts or loans that support financial security and independence. This could mean helping with college costs, giving a down payment on a house, seed money to start a business or paying bills for a medical emergency.

Finally, protect yourself and your nest egg. Before you commit to giving financial assistance, discuss with your financial advisor exactly how much you can afford to help. Remember, your retirement is happening a lot sooner than your child's. Young adults still have a lifetime to save smart and build their security.