Helping children become financially responsible image

Helping your children become responsible adults

Published: August 30, 2023

It’s the time of year when many families help their children pack their belongings and prepare for the next adventure. Whether it’s the first year of college, a first job, new apartment, or another exciting experience, you are probably feeling a sense of pride combined with a bit of nostalgia. However, before you say your goodbyes, you want to make sure they’re prepared for their newfound independence. This is an opportune time to reinforce good cyber and financial habits. Below are some important issues to review with your children.

Staying Cybersafe

As your children head off to college dorms with new roommates and presumably spending late nights at the library or going out with friends, they will likely encounter individuals they don’t know. This represents a prime opportunity for bad actors to steal electronic devices and personal information. Although smartphone manufacturers are making it increasingly difficult for a criminal to obtain personal information from a stolen phone, it doesn’t seem to be stopping would-be thieves.

Cybercriminals are becoming alarmingly sophisticated in their tactics. A article describes a disturbing new trend in the theft of personal information where a small group of two or three people “befriend” someone out at a bar or other social gathering, then take advantage of the situation and steal passwords, account numbers, and other personal information. According to the Cybersecurity and Information Security Agency, an agency of the Department of Homeland Security, phishing, or using seemingly legitimate emails to steal sensitive information, continues to dominate, accounting for approximately 90% of cybercrime. Taking some simple steps can significantly reduce the risk of becoming a victim of cybertheft:

Look out for “phishing” – your children may believe that they are too technologically savvy to be fooled by a phishing attempt. However, phishing attempts have gotten increasingly sophisticated, and it is often challenging to discern between real and fake emails and websites. Warn them never to provide personal or financial information in response to an email, text or phone call. Instead, they should call the organization back on a verified, legitimate number to check and report any impersonation attempts.

Keep devices close and accounted for – do not lend out devices or “hand” them over to someone for a minute to look at something, putting both the device and their information in peril. Crowded bars and similar venues are notoriously prime territory for theft. If your children are out at a bar, a club, or a party, they should put their phone somewhere they will notice or feel if someone is trying to take it.

Don’t share personal information – do not share your passwords, social security number, driver’s license, passport, or any financial account numbers with anyone. Try not to log into accounts from a public network and if you do, shield your screen when logging in if strangers are around. Also, use strong passwords that cannot be easily guessed by a thief, not birthdays, home addresses, familiar phrases, or phone numbers. Never use the same password for different sites or services. A password manager can provide one convenient, secure place to store this information. Finally, when available, enable two-factor authentication.

Taking Financial Responsibility

Although you’ve probably had conversations with your children about finances and financial literacy, this may be the first time they are responsible for actually living on a budget. This may also be the first time they are accessing their financial accounts on a regular basis, using both debit and credit cards, as well as payment apps, such as Venmo and Zelle. Additionally, if your children are starting new jobs or working during college to earn extra money, they may be getting their first regular paychecks.

Distinguish between “needs” and “wants” – review the difference between items they need, such as food and shelter, versus those they want, like a night out at a popular spot or an expensive vacation with friends. They will have to exercise self-restraint to say no to some purchases, which may give them an appreciation for the difficult decisions parents often have to make! Help your children develop a reasonable budget based on sources of income and projected expenses and be firm in your expectations. Understanding the need to plan and make responsible choices can set them up for future financial success.

Learn about credit versus debit – teach your children the difference between credit and debit to help them develop good credit habits. It’s important to build up a strong credit history in anticipation of future apartment, house, or car purchases. However, it can be tempting when just starting out to succumb to seemingly attractive credit card offers that can lead to large balances and high interest rates if your child forgets or is unable to pay off the balance in time. Explain to them that paying interest can result in paying several times the amount of the original expenditures over time. Also, review different credit card options with them to help them choose a card that is appropriate for their financial situation.

Understand paycheck deductions – getting your first paycheck is a thrill, but it can also be a shock when comparing the gross pay versus the net after deductions. Reviewing the deductions with your child can help them understand how much is paid for federal, state, and local taxes, how Social Security and Medicare taxes work, and provide an opportunity to discuss the benefits of pre-tax savings if they are eligible for participation in a defined contribution plan or Health Savings Account (HSA).

Klingenstein Fields Advisors is committed to working with you and the next generation to build financial knowledge, confidence, and responsibility. We welcome the opportunity to meet the younger members of your family to discuss short-term cash flow strategies, long-term saving and investing, staying cybersafe, and other financial topics. Please contact us at 212.492.7000 or

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Important Disclosures

This material is provided for informational or educational purposes only and should not be construed as investment, accounting, tax or legal advice. Always consult a financial, tax and/or legal professional regarding your specific situation. This communication is not intended as a recommendation or as investment advice of any kind. It is not provided in a fiduciary capacity and may not be relied upon for or in connection with the making of investment decisions. Nothing herein constitutes or should be construed as an offering of advisory services or an offer to sell or a solicitation to buy any securities or a recommendation to invest in any specific investment strategy. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future returns. The views expressed herein are as of a particular point in time and are subject to change without notice. The information and opinions presented herein are general in nature and have been obtained from, or are based on, sources believed by Klingenstein Fields Advisors (“KF Advisors’) to be reliable, but KF Advisors makes no representation as to their accuracy or completeness. Although the information provided is carefully reviewed, KF Advisors cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided. KF Advisors represents two investment advisers registered with the Securities and Exchange Commission: Klingenstein, Fields & Co., L.P. and KF Group, LP. If you are a KF Advisors client, please remember that it remains your responsibility to advise KF Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.