Stefan R. Huber | Research Analyst
January 22nd, 2020
Developing good money management habits will serve you all throughout your life. Which makes it extra important to start these habits early. But saving is no longer limited to stuffing cash under the mattress. There’s a wide variety of financial tools out there that can benefit young savers looking to get a head start. But many young people simply don’t know where to look, or even what’s available. Here are some ways to help young savers learn to manage their money:
Reading up is a time-tested method to learning just about anything. There are thousands of books available that address common wealth management concerns. And many of them are geared towards younger audiences. Scott Fligel, a financial planner from North Carolina, recommends “Simple Wealth, Inevitable Wealth” by Nick Murray and “The Millionaire Next Door” by Thomas Stanley. “They cover investing principles in plain English and educate savers about the long-term benefits of compound interest,” says Fligel. These books, and many others, aim to give young savers the needed literacy to make smart financial decisions.
Charitable giving is not only good for the heart, but good for the brain as well. Giving away part of a paycheck to charity encourages young workers to avoid overspending by dedicating a certain amount to a worthy cause. Mike Kogonen, an asset manager in Wisconsin, encouraged his children to give a tenth of their money to charity. “I want them to learn this while they’re living with us versus later when they’re on their own. Hopefully, by the time they get to college, they have a better process for not spending money they don’t have, and giving away a designated amount,” says Kogonen. Even a small sum can go a long way in setting young workers on the right path to proper wealth management.
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Making the connection between your wealth manager and the next generation can help boost their financial confidence. Wealth managers have increasingly been reaching out their client’s younger counterparts to deepen the family relationship. Tim Harrison, a financial planner in Nebraska, takes a unique approach in coaching the young as they reach adulthood. “It’s the gestalt protocol where you can’t tell people what to do. It’s better to share your experience of what others have done, what worked and what didn’t work,” Harrison says. Forward thinking advisors can benefit from cultivating these relationships to retain families across generations.
Have Them List Out Goals
Stimulating young savers to think hard about their financial goals can help them to see the bigger picture. Writing down long-term visions and short-term goals is a great way to visualize the need for proper financial management. Tim Harrison generally leads younger people with questions designed to make them think about their plans. “I ask questions such as ‘What are your career goals?’ and ‘How do you think about money?’ Such open-ended inquiries usually sparks a ‘life-360 open conversation,’” he says. Bringing the spotlight to goal-accomplishment can help young people better understand where they’re going financially.
There are many different things that we can tell younger savers. What are some pieces of advice you would give to young wealth managers? Share with other members!
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