{"id":51046,"date":"2024-02-08T07:47:41","date_gmt":"2024-02-08T13:47:41","guid":{"rendered":"https:\/\/taxprocenter.proconnect.intuit.com\/?p=51046"},"modified":"2024-02-08T07:47:42","modified_gmt":"2024-02-08T13:47:42","slug":"teen-finance-101-for-your-clients-children","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/practice-management\/teen-finance-101-for-your-clients-children\/","title":{"rendered":"Teen finance 101 for your clients’ children"},"content":{"rendered":"\n

As trusted tax advisors<\/a>, we help and navigate our clients through all sorts of life events<\/a> that present their own set of circumstances, and tax scenarios and implications. Taxes are an important part of this financial journey. However, equally important is the foundation and understanding of fundamental and core principles of personal finances. This is crucial to prepare for, and weather, life’s pitfalls, as well as plant the seeds for future goals, aspirations, and success.<\/p>\n\n\n\n

As we meet with our clients on a regular basis throughout the year\u2014and most notably during tax planning<\/a> sessions\u2014there is an opportunity to educate our clients\u2019 children. As they begin to embark on their own journey, they are the next generation and potential future clients. This allows us to further service our current clients, and strengthen and deepen existing relationships in a holistic way.<\/p>\n\n\n\n

As our clients\u2019 children become teenagers and young adults, they will begin to work and earn wages for the first time, prepare for college or a trade, and begin to develop long-term personal and professional relationships. These important events provide great learning opportunities.<\/p>\n\n\n\n

Financial literacy<\/strong><\/p>\n\n\n\n

Unfortunately, financial literacy hasn\u2019t been a large part of the high school curriculum. However, in recent years, there has been a large push to provide a financial literacy course. According to a recent article by Ramsey<\/a>, 25 states require high school students to take a standalone personal financial course in order to graduate. And within many households, it may not be a topic that\u2019s formally taught or discussed. Previously, it\u2019s been something that we\u2019ve learned from experience, failure, and word of mouth.<\/p>\n\n\n\n

Many of us can start out digging ourselves into a hole or start out with a deficit. With large amounts of student debt, consumer debt, a competitive job market, and lack of retirement savings, it\u2019s become increasingly crucial for teenagers and young adults to be equipped with, and aware of, the knowledge needed to at least start off with a clean and empty slate.<\/p>\n\n\n\n

Holding personal finances 101 seminars for our clients\u2019 teenage children<\/strong><\/p>\n\n\n\n

As tax advisors, consider hosting a seminar for your clients\u2019 teenage children and young adults. You can begin the discussion and make them aware of the financial habits and know-how needed to become able and astute in managing their personal finances\u2014and prepare for big life events.<\/p>\n\n\n\n

This can be an active discussion and dialogue. Consider bringing in guest speakers who can talk about their own experiences and journeys: clients who are in college, young professionals, and even interns and staff members in your firm. An added plus: This is a great way to engage, connect, and invest young professionals in your firm.<\/p>\n\n\n\n

Our clients\u2019 children are a large part of their tax planning. If there already hasn\u2019t been a discussion, this can serve as an opportunity for parents and children to have an open dialogue about their child\u2019s future aspirations, financial considerations and support, expectations, and how to get there through effective planning and alignment.<\/p>\n\n\n\n

While there is much to learn about personal finances\u2014and it is an ongoing journey of discovery, education, and circumstances\u2014four points essential to begin the discussion include:<\/p>\n\n\n\n

    \n
  1. Budgeting<\/li>\n\n\n\n
  2. Tuition and student loans<\/li>\n\n\n\n
  3. Credit cards and consumer debt<\/li>\n\n\n\n
  4. Saving and investing<\/li>\n<\/ol>\n\n\n\n

    Budgeting<\/strong><\/p>\n\n\n\n

    It is important to teach teenagers about earning income<\/a> and necessary recurring expenses. When a child gets their first job and paycheck, learning about tax withholding, Social Security<\/a>, and Medicare<\/a> is one of the first steps in understanding take home pay. This includes the frequency and regularity of incoming money, coupled with paying off essentials such as housing, food, utilities, mobile phone, and car insurance. As children become older and start to own or use large and essential items, understanding that those possessions have associated maintenance and expenses helps them understand proper budgeting.<\/p>\n\n\n\n

    For example, consider having them experience paying for their portion of the wireless phone bill, gas in a car, routine car service, and their own clothes. Having to pay for necessities out of their own pocket with a finite amount of saved funds reinforces the purpose of effective budgeting, and naturally introducing the concept of an emergency fund. When a phone breaks, a car isn\u2019t working, or they don\u2019t have enough money to go out, it also starts to define and prioritize emergencies, needs, and wants when needing to make financial decisions on how to spend their money.<\/p>\n\n\n\n

    Tuition and student loans<\/strong><\/p>\n\n\n\n

    Rising student loans have become an issue, as students are graduating with increased student debt that can potentially outpace their income. It is important to know how a student\u2019s education will be funded. Candid discussions and questions will need to take place:<\/p>\n\n\n\n