We went to a high school graduation party on Saturday night for our neighbor’s son. Grad parties are a really big deal in Minnesota in late-May & early-June. We have another one next weekend.
At this grad party, a neighbor and I were talking about kids and how to effectively launch them into the world of adult finances. He has one daughter graduating now and a son due to graduate next year. Our approach worked pretty well with our son, so I thought I’d share some of our principles here.
I should note that we were fortunate enough to do a lot for our son, and he was responsible enough to not be spoiled by the ‘parental patronage’.
- First, we paid for his college tuition, room & board
- Second, we expected him to work full-time in the summer; retail jobs at first, then an internship.
- Third, half of his wages went into savings, except day-to-day needs; no big splurges (>$500).
- Next, we gave him my wife’s old car when he was a Junior; a 10-year old Acura – we paid insurance.
- Lastly, whatever he made, we secretly ‘matched’ in an IRA while he was in school; This became his college graduation present.
With this plan, he graduated with a Bachelor’s degree, no debt of any kind, money to move out and start on his own, a reliable used car, and a start on his retirement savings.
It’s more than many parents can do for their kids, but it felt great to do it. As it turned out, he graduated during the CV19 lockdown and moved in with us for awhile – putting his rent savings into his own brokerage account.
If you have kids that are graduating high school this year – or are getting close – think about what you are able to do. My wife and I both recall our early 20s as very financially difficult with school, work, and broken down cars. We had significant student loans & credit card debt that took us about 5 years to get free of. We wanted his start in life to be different.
What other ideas do you have to help get your kids or grandkids launched effectively into adulthood?
MrFireStation 
Sounds like you have given your son the tools to become financially successful and have helped him avoid debt. I would add to your list by teaching young graduates to avoid getting involved with a spouse who is not on the same page when it comes to finances. Fighting about money is the biggest reason for divorce.
Most of the US are spendthrifts and need to be avoided by people living the FIRE lifestyle. I am skeptical of getting a spendthrift to change their ways and they can wipe you out economically.
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Yes – agree! My wife worked at a bank when we first got married and the problems she saw every day certainly gave us an education in how not to handle money.
I’m surprised to see how high “weight gain” is on this list! https://clagett-law.com/blog/10-leading-causes-of-divorce-in-the-united-states/
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Your wife is smart enough to see other people having problems and learning from other peoples’ mistakes. Learning this way is much less painful than having to experience something yourself to learn the lesson.
I have known accountants and auditors who you would think should be on top of their finances, but were the opposite. They lost their houses because they were spendthrifts. Coincidentally, the auditor worked for CountryWide, which was the main contributor to the 2008 subprime mortgage debacle.
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That’s how the AI and self-driving cars work, right – machine learning. Watching situations to see what works and what doesn’t and then emulating the best practices!
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So far I have not been a big fan of AI and still think it is over hyped. It is a real PITA when companies use it to reduce their customer service cost by making it hard to get to real people who can handle your problem.
My wife has tested AI and uncovered some real flaws. She tried looking up information about a neighbor she had just met. AI responded about the neighbor being in and out of drug rehab and being incarcerated. I bothered to read the citations and found that the AI had taken a person with the same first name and slammed everything together which resulted in a salacious and false blob.
She teaches part time at a Nursing College. She recently had a bunch of students come up to her and complain about a test that they had taken. Apparently, the Deans made up the test using AI. The tests didn’t test according to the materials that were taught and over half of the students were failing. The easy fix for this would have been grading on a curve, but no they didn’t do this. Using AI to generate work product where you lack the ability to judge the quality of the work will lead to disaster.
In the investing world, AI will probably make mistakes that those who understand investing can take advantage of.
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