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Patti’s Perspective: Educating Young Adults on Money Smarts

VanceWealth Uncategorized

Empowering Women to Achieve More

Those who know me know that I am passionate about educating young adults with money smarts. Unfortunately, financial literacy isn’t taught in schools (although I see this increasing!), and often the conversations aren’t happening at home.

College kids are graduating with credit card debt and student loan debt. A study from College Finance published in 2021 found the average college student has more than $3,280 of credit card debt. Getting out from under this debt can seem daunting and complicated.

So, how do parents help? First, have the difficult conversations. Spending habits start young (saving habits do, too!), and our kids need to understand how credit cards and compounding interest work. It seems simple enough, but I would guess most kids don’t know how this works. Here’s an example: let’s say you have $3,000 of credit card debt at 18%. Assuming you paid the minimum payment of $75, it would take you over five years to pay this off, with a whopping $1,615 in interest paid.

Compounding interest hurts on the credit side, but it works beautifully on the saving side. Once your kids are working and can contribute to a Roth IRA, please share these staggering numbers: if they were to contribute $6,000 per year to a Roth IRA, starting at age 20, earning on average 9% over 40 years, they would be sitting on a nice pile of assets! The assets would be tax-free and worth just over $2 million! Here’s a point not to be missed… their personal investment was just $240,000 ($6,000 x 40 years)- the difference, $1,760,000, is pure growth! Their money has been working hard for them so they can reap the rewards later. Some rules to contributing to Roth IRAs exist, so seek expert advice.

In the end, education is empowering. So, let’s set up our kids for success so they can live a joyful and prosperous life. If you want your kids or grandkids to have a conversation with one of our Wealth Advisors, feel free to book a complimentary meeting on our website. We are happy to be part of their financial journey.

When our finances are in order, it opens the space for living more fully. I have written a book, “Money Rules 101- Master Your Money Before it Masters You,” focused on educating young adults about money smarts. You can download it here:

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The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.