July 12, 2021

Getting Launched: Helping Children Manage Money

Getting Launched Helping Children Manage Money

Clients often ask us how to help their children or grandchildren get started in managing their own financial affairs. For some people this comes naturally, but not for everyone. The American education system doesn’t necessarily do a good job filling in the gaps. Furthermore, discussing money with family members can lead to difficult conversations, filled with emotion and potential strain.

Here are the important themes to consider when getting started financially. You can download and use our handy checklist to make sure you hit everything.

How much do you know about money?

First, what is your level of financial literacy? To understand your finances, you need to know the language. Learn the differences between assets and liabilities, and how to calculate your net worth. Look at a cash flow statement and how to categorize income and expenses, and learn the factors used in financial modeling such as inflation, growth, yield, and basic time value of money calculations.

Along with basic financial literacy, begin sorting out your financial goals, short–term and long–term. Make those goals “SMART” goals: Specific, measurable, attainable, relevant, and time-based. Consider how you can match your finances to your goals. For example, if you want to.

Cash Flow

Cash flow issues can be very important when you’re starting your financial life. Income is lower at the beginning of a career, most folks haven’t had time to build any cash savings, and often student debt makes it difficult to get started.

Now is the time to create a budget and learn to watch your spending and live within your means – habits that will serve you well throughout the rest of your life. There are numerous online resources for learning to budget, including our article on Steps for Starting a Budget. Now is also the time to begin building an emergency fund and of between three and six months of expenses to avoid debt issues in the future.


Taxes are a fact of life and though most people just getting started with their finances have a relatively simple tax situation the system can be very confusing. Learn the basics and pay attention to your income, your tax withholding, and any other factors, such as property or investments, that may require tax reporting. Don’t be afraid to seek help from a professional.


Getting started financially also often means opening bank accounts or investment accounts. Our general advice regarding a banking relationship is to have a checking account at a bank that is convenient and accessible. Savings accounts can be at the same bank, but often online options offer better rates and can be easily linked to a checking account, and these are fine so long as they are safe and insured through FDIC insurance (their website will tell you).


If cash flow and short-term savings are squared away, starting to invest for the long-term may be an option. There are lots of options for getting started today via apps and online programs – some are good, and some are questionable. Obviously, we have our biases, but we recommend meeting with a professional and discussing the best way to get launched. Use our Investment Philosophy for a foundation and a starting point for discussing options with an investment advisor.

Insurance and Risk Management

Insurance and risk management can be a difficult subject for young adults – after all, a sense of invulnerability goes with the territory. Here’s a rule of thumb: insure the things that you couldn’t pay for out of your savings if something went wrong. That includes your health, your apartment or house, your car, and your life if others are depending on your income. It does not necessarily include your iPhone or your refrigerator. If those die, you should be able to cover them with savings and the cost of the insurance probably is more than the risk that it covers.

Basic Estate Planning

Basic estate planning is another financial life chore that young people often ignore. While nobody likes to think about estate planning, there are basics, such as a will that everyone should consider regardless of age. You can watch our webinar with estate planning attorney Molly Petitjean to get her opinion and expertise on estate planning for different life stages.

The Wrap Up on Managing Money

The big thing is to not hesitate to ask for help when you need it. Find a professional and ask questions. For help, we recommend our fellow planners at the XY Planning Network, an organization of fee-only planners dedicated to working with younger clients. You can search here for members that may fit your needs.

About Shotwell Rutter Baer

Shotwell Rutter Baer is proud to be an independent, fee-only registered investment advisory firm. This means that we are only compensated by our clients for our knowledge and guidance — not from commissions by selling financial products. Our only motivation is to help you achieve financial freedom and peace of mind. By structuring our business this way we believe that many of the conflicts of interest that plague the financial services industry are eliminated. We work for our clients, period.

Click here to learn about the Strategic Reliable Blueprint, our financial plan process for your future.

Call us at 517-321-4832 for financial and retirement investing advice.