Birthday cards, tooth fairy and allowances – that used to be their main income sources, but as your kids move into their first real job, you’ll be surprised what a transition it is for you.
Health insurance, tax exemptions and retirement plans are all new for them, and while you want them to make their own decisions, you also want them to get a good financial start. Here are a few tips for parents of newly adulting children:
- Prepare them for benefits enrollment – A little knowledge goes a long way. Provide the basics of employer life, disability and health insurance.
- Cover their health insurance until age 26 – If you have family health insurance with your employer, your child can remain on your plan and decline employer coverage until age 26. That could mean major savings for your child.
- Encourage disciplined savings – Making real money is the opportunity to start real savings habit. Before that first paycheck hits, have them start contributing to their 401(k) or employer savings plan. It will pay off over time. Related: The early bird gets the worm
- Discuss tax exemptions – Your child may not understand tax exemption. Write a 1 in the box and they deduct less for taxes; write a 0 and they deduct more each pay. In the end, they pay the same taxes, but by choosing to deduct more each pay, they can help assure a refund rather than a tax bill in April.
- Let them make the final decisions – Ultimately, these are their decisions and part of becoming an adult.
What are some tips you have for parents entering this new phase?