4 tips to help children navigate the path to financial independence

Today’s young adults are launching into a different world than the one their parents entered. Housing is much more expensive, the job market is changing, and so is the way we bank and invest.

So as children grow, it’s important to nurture the financial literacy seeds planted when they were younger, preparing for the new decisions and challenges they’ll face as they embark on a life of independence. And these 4 tips are a great place to start.

1. Focus on financial literacy.

Teach kids to save for a goal, reinforcing the value of spending money on “needs” versus “wants.” If you haven’t already, walk kids through banking basics and help them start building an introductory understanding of financial concepts — like budgeting or building savings over time.

As children enter early adulthood, help them apply their financial skills in a practical way. That could mean setting up direct deposit for their paycheques and choosing low- or no-fee accounts, like Vancity’s E-Package Chequing Account.

Once they’re over the age of 19 and understand the importance of their credit score and of paying off their balance in full, a young adult can also apply for a Vancity enviro™ Visa* card. Along with building credit, these cards will allow young adults to earn valuable reward points and support innovative and climate-friendly initiatives in their community.

2. Plan for educational costs.

When it comes to educational costs, plan together and start saving as early as possible. By identifying tax incentives like Registered Education Savings Plans (RESPs) and government training grants, you can get support for tuition fees, school supplies, and even room and board if kids are studying away from home.

Eligible families may also qualify for up to $2,000 in federal funds through the SmartSAVER program, designed to help boost participation in the Canada Learning Bond to help kids pursue post-secondary education.

3. Plan for housing costs.

With real estate prices reaching record highs in B.C., it’s tempting to — if you’re able to —contribute to a down payment for a young adult’s first mortgage. But it’s crucial to consider the short- and long-term impact of this on your finances, too.

Instead of a down payment contribution, you may choose to support their home ownership goals by helping pay for closing costs, renovations, or the first few months of mortgage payments.

Encourage them to also explore government programs like the Home Buyers’ Plan, First-Time Home Buyer Incentive, and B.C.’s first-time home buyers’ program.

Have questions or not sure how best to contribute? Seek professional advice from your wealth manager: they can provide guidance to ensure your financial wellbeing is protected while helping your kids in a way that feels comfortable to you.

4. Discuss their financial needs with them.

The budget for a young adult can vary wildly, depending on whether they have expensive studies, pastimes, or require a car to commute to work or school.

Ultimately, the best way to set a young adult up for financial success is to have open conversations about their finances, financial goals, and how to attain them. This includes both saving for long-term goals and planning for everyday expenses, like the cost of utilities or running a vehicle.

To speak with a wealth professional about your financial goals, contact Vancity’s local Oak Bay Wealth Advisor, Paul Brebber, at 236-638-1442 or email paul_brebber@vancity.com.

READ MORE: 3 myths about socially responsible investments

enviro™ is a trademark of Vancouver City Savings Credit Union.

* Trademark of Visa Int., used under license.

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