While most parents of teens feel the need to teach their teens money management skills to prepare them for leaving the nest when they head off to college, Chris and I have a bit of a different dilemma.
When Angeline was ten, her biological father passed away. We receive a survivorship payment from the social security administration each month, which we are to use to cover her expenses. We have been blessed in that Chris earns a nice salary and we do not always need to use all of those funds. At the end of each year, we transfer over whatever we haven't used to a savings account for Angeline to help her pay for her college education - and whatever other expenses she will have once she turns out and starts out on her own.
In addition to that savings, Angeline's father had a life insurance policy, which the company rolled into an annuity because she was under the age of 18 at the time of his death. While it isn't making much money, the annuity itself was for $25,000, which she will have complete control over when she turns 18.
Angeline is 15 now...that gives us 3 years to teach her how to manage money before she gets her hands on that annuity! I was just showing her this Planning for Living Workbook from Genworth Financial, which I think will really help her figure out how much she needs to get through her college years.
Chris and I were thinking about contacting a financial advisor to help Angeline get ready for college, but after reading this article about how women tend to handle their money better as they get older I got to thinking...I can help her plan out her budget, investment and savings when she turns 18. I am much better equipped at handling our budget, investing and retirement planning than I was ten years ago, and I have already learned about all of the mistakes she would likely make on her own!
So why not use all of my knowledge and new financial savvy to help teach Angeline about money before she finds herself with a heavily-funded bank account?
Angeline is going to college, mostly likely out of state, and while I am sure we will still have an influence over her, now is the time to teach her the importance of budgeting, saving and thinking about the future. She already knows the value of a hard-earned dollar, and likes to save some of the birthday and Christmas money she receives each year. It wouldn't be too far of a stretch to help her understand how important it is to manage her inheritance wisely!
Do you have teenagers who might be expecting a windfall when they become adults? I would love to hear any advice you can give me!