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1.  More Adult Children Still Living At Home

2.  A Possible Silver Lining?

3.  Teaching by Example

4.  Starting Early is the Key

5.  Internet Teaching Resources


In June of last year, I published an E-Letter about teaching children how to save and invest. This is one of the subjects that I like to repeat from time to time because it contains valuable information that I want both new and existing subscribers to be able to take advantage of.

I want to revisit teaching kids to save and invest today due to two pieces of information that came to my attention. First, according to the US Census Bureau, the number of adult children still living at home after completing their education is growing rapidly. Obviously, this is due to the employment crisis currently gripping America, but there can be a silver lining which I will discuss as we go.

You may think that if you didn’t teach financial know-how to your children when they were small that it may be too late now that they are adults, but it’s not. In fact, the current economic environment is an excellent way to show that rainy days do come from time to time and the importance of disciplined money management.

While much of today’s E-Letter will be dedicated to helping adult children, teaching kids about money when they’re young is the best course of action.  If your kids are still young, now is the best time to start teaching them about how to handle their money so they can develop good financial habits early in life. Fortunately, resources abound for teaching younger children how to manage their money.

That’s where the second piece of information comes in. A recent article about teaching kids about money matters was featured in InvestmentNews, a publication targeting financial service professionals. This article highlighted not only the need to teach children about saving and investing but also provided a number of Internet resources to help parents toward that goal. I’ll share these with you later on.

As always, I see these E-Letters as resources for parents and grandparents, so feel free to print and forward copies on to family and friends that you feel may benefit from this knowledge.

More Adult Children Living at Home

The US Census Bureau recently reported that the number of adults ages 25 to 34 living at home rose from 14% in 2005 to 19% in 2011. Does this mean that a greater percentage of young adults are lazy and content to mooch off of their parents for a longer period of time, or is this yet another indication of the sad state of the economy and employment? The answer seems to be the latter.

In her book, “The Accordion Family,” sociologist and author Katherine Newman analyzed what is becoming known as the “boomerang generation,” for its tendency to return after being launched out of the nest. She not only studied US households, but also trends in other countries. According to her research, the primary reasons for adult children either staying at home or returning home are economic. High unemployment makes it more difficult for new workers to enter the labor force, while owner-occupied housing is still somewhat expensive.

Newman also brings to light something you might not think of in relation to employment, and that’s credential competition. With so many people chasing fewer jobs, those with less education and/or fewer professional credentials are finding it harder to find a job. I know this is true because I talked to a recent college graduate who said that starting positions in his field formerly open to those with a 4-year degree are now being claimed by newly minted lawyers. I guess you can’t blame employers if they can get a lawyer at a bachelor’s degree price.

Another interesting finding is that we are actually returning to a historical pattern of multi-generational homes. Prior to WWII, it was far more common for multiple generations to live in the same home (like the Waltons). However, the period of great affluence after the war produced a “norm” where children moved out before getting married and mom and dad were left with an empty nest. Baby Boomers see this as the way things should be, but it wasn’t that way before their generation and may not be in the future.

Gary D. Halbert, ProFutures, Inc. and Halbert Wealth Management, Inc.
are not affiliated with nor do they endorse, sponsor or recommend the following product or service.

A Possible Silver Lining?

One possible advantage of adult children moving back home is that it provides parents with a “teachable moment” in the lives of their children. Even if you didn’t give your children a financial education when they were young, the recent economic downturn may have given you a second chance.

Unfortunately, many parents of the Baby Boom generation see moving back home as a weakness – that their kids are just lazy or “don’t have it together.” Yet, taking a different view as a parent could lead to better lifelong money habits for your adult child (not to mention a more harmonious living arrangement).

If your adult child is not a good saver, all is not lost. The important thing to remember is that you have to approach adult children much differently than you would younger children. Adult children have tasted independence, may be highly educated and, let’s face it, sometimes think they are smarter than you are (but we know better, don’t we?).

That being said, let’s discuss some ways that you might approach your adult child regarding saving:

  1. The first and most obvious thing to do is talk about it. It seems that financial topics are sometimes taboo among family members. It is also important for this communication to be a conversation and not a lecture. We all know how kids turn off their listening devices when they hear a lecture, no matter what their age.
  2. Communication about finances should also be a sharing of information, not a one-way street. Parents are sometimes hesitant to disclose all of their financial information to their children. Just remember that it is usually easier to get someone to share their personal information if you share yours first. That doesn’t mean you have to show them your financial statement, just enough to get them to open up to you.
  3. Don’t worry about not being qualified to talk about financial matters with your child. We’re talking about how to save money, and that’s about as basic as you can get. If you know how to save money yourself, you should be able to easily communicate that to your adult child.
  4. Help adult children set savings goals and participate in monitoring their progress. Weight Watchers has been successful by providing positive reinforcement for desired behavior. The same idea can work with your adult child as they reach their savings goals.
  5. Encourage investing as early as possible. Adult children may run off a list of reasons why they can’t start investing right now. However, the power of compound interest is strongest when savings and investing are started at an early age. For example, if a college graduate starts saving $100 per month at age 22, he will have accumulated over $232,000 by age 65 assuming 6% compounded annual earnings. If the same individual waits until age 32 to start saving $100 per month, the accumulated value at age 65 will be only about $120,500, again assuming 6% annual compounded growth.

A final thought is that you should use the current economic environment to your advantage.  When everything is going well in the economy, it’s sometimes hard to convince a young adult that a rainy day could come along. That’s not a problem right now, especially for an adult child who has had to move back in with their parents for economic reasons.

Teaching By Example

Perhaps the best way to influence your adult child’s financial behavior is by providing a good example. This includes not only sharing methods and strategies for saving, but also includes discussing some of the obstacles to saving that I have noted above. Wisdom that comes with age knows the folly of living beyond ones means and keeping up with the Joneses. You may have lived through the same learning process, so share that with your adult child.

If you have been a diligent saver and have a secure retirement, share with your adult children how you arrived at this achievement. Don’t assume that they automatically know this because they grew up under your roof. Help your adult child to lay out a plan so he or she can have the same peace of mind as they near retirement.

One of the best things about teaching through your own example is that it’s hard to argue with the results. My father provided an example for me to follow when it came to saving money. I am sure that his “leading by example” is a major reason why I have the personal commitment to saving that I do.

I am confident that the same can be true for your adult children. Seeing an example of the benefits of saving and investing, and talking about it openly and frequently, can go a long way toward helping your children become diligent savers and wise investors on their own.

Starting Early is the Key

While the discussion so far has been directed toward teaching adult children about money, it is obviously better to instill good money management habits while children are young. There are many ways to motivate kids to save, especially young kids. Probably the most common way parents encourage their kids to save is by paying them a weekly “allowance.” Parents can encourage the kids to save some of their allowance each week or month, or they can require them to do so.

Both of our kids are in college now, but when they were young, Debi and I wanted to create a better incentive to work and save than an allowance (in fact, we never gave them an allowance). As soon as our kids were old enough to understand saving, we agreed to MATCH whatever they saved from the money they were given or earned. If they brought us $20 to put in their savings account, we matched it and deposited $40 in the account. You can set the “match” at any level you want, not necessarily 100% as we did.

We made it clear from the beginning that this was their money, in their own separate accounts, but once they put money into the savings account, they could not spend it without our approval. We did allow them to keep “spending money” outside the savings account for day-to-day expenses, etc. We told them from the beginning that their savings would one day be used to buy a car, pay for college expenses, etc.

As a result of this arrangement, both kids were eager to find work they could do to make money, both at our property and for neighbors. As noted above, they quickly became very serious savers. Best of all, they never asked to make a withdrawal from their savings accounts to purchase anything, and they are very frugal with their spending money to this day.

Matching what your kids save may not be right for you. Also, not all kids can stay focused on a long-term financial goal like a car or college. If this is the case, you can use shorter-term incentives of many different types. There are many ways to encourage and motivate kids to work and save money. I will recommend a very good book later in this E-Letter that has many additional ways to encourage your kids or grandkids to be good savers.

Internet Teaching Resources

Earlier in this article, I mentioned an InvestmentNews article that offered some beneficial Internet-based resources for teaching financial skills to kids. Some of these tools are geared toward younger children but others can even be helpful to adults. They also incorporate various gaming and other online features that will likely be very familiar to today’s Internet generation.

Before briefly discussing these sites, it is important to note that most have a basic system that is free to use, but they also have products or premium services that cost extra.  Even so, a modest fee might be a small amount to pay for a lifetime of good financial habits for your children.  Here are the resources outlined by InvestmentNews: – Kidworth is a free online service that seeks to teach children to manage their money wisely. It does so by focusing on setting financial goals important to the child and then managing money in order to reach those goals.  This site even has a way to share goals through social media sites on the Internet. One of the reasons I like this site is that one of the major goal categories is charitable giving. I don’t think any money management teaching is complete unless it includes giving back in some way. – This website is presented in a video game format, so it should have no trouble getting kids’ attention. Parents and children work together to decide on a set of tasks and rewards.  As children complete the tasks, they earn points that they can redeem for rewards. Note that this site is currently in beta testing so all functions may not yet be finalized. –  Allowance Manager is a totally free online service, but it is probably better suited to older kids as it involves a spreadsheet to track allowance and chore charts. The website notes that the service is designed to help parents track their kids’ allowances, reward good behavior, discourage bad behavior and track chores.

While not as fun-based as some of the other alternatives, I like this site because it helps kids concentrate on where they are spending the money they receive as allowances, gifts and any other sources. So many times, kids let money slip through their fingers without even knowing where all of it goes. The tracking software in Allowance Manager helps kids to better manage how and when they spend money. – The final online resource to help kids manage their money is definitely for older children.  In fact, it could be used by someone of virtually any age who needs help managing their money. The premise behind Hello Wallet is that only about 20% of Americans have access to quality financial guidance, yet everyone needs it. Hello Wallet seeks to address this void by delivering technology-based financial advice that is tailored to an individual’s specific situation and needs. And yes, there’s even an iPhone app for this site.

Unlike the other websites discussed above, Hello Wallet is not a free service. The price of membership is $8.95 per month, which might make this an excellent gift for adult children who may need help in managing their finances.

Get Your Kids Involved In Investing

Once your kids have a handle on saving money, the next step is to teach them how to start investing their savings. Unfortunately, many kids know very little about the stock markets, the bond markets, mutual funds, etc. In addition to motivating them to save, and providing ways for them to work and make money, it is also very important to teach them about investing. Here too, I believe it is an obligation of the parents to teach their children about investing.

There are various ways to get your kids involved with investing. By all means, you should share with them your philosophy on investing and explain why you hold the investments you do, and in what proportions. Teach them how to read account statements. Explain to them what brokers and Investment Advisors are and what they do. Teach them about stocks, bonds, mutual funds, etc., etc.

There are two really good books I would recommend to you as parents or grandparents. The first book – Kids & Money by Jayne Pearl - is simply outstanding as a guide for parents in teaching their kids about saving and investing. Another good source is The Wealthy Barber by David Chilton, an excellent book you should have your teenage (or older) children read. Both are available on


I believe that as parents, we have an obligation to teach our children the importance of saving. Likewise, we need to find ways that our kids can work and make money to add to their savings. And in my view, we also have an obligation to teach them how to invest wisely, whether they are teenagers or adult children.

Of course, this doesn’t really work if parents are a bad example. One of the problems with Baby Boomers is that many never learned to save themselves, so they are not particularly good at teaching their children how to save. Having been largely raised by parents of the Depression era, Boomers for the most part rejected their parents’ tendency to put money away for a rainy day and opted for consumption.

If you happen to be in the “bad example” group, don’t think that you can’t help your adult children learn how to handle the money – make it a team effort. There’s no reason why you can’t search out resources about saving and investing and explore them with your adult child. In fact, it may be more of a motivator that you are learning together. After all, it’s never too late to start a program of saving and investing.

I hope this week’s information helps. Feel free to share this information with anyone you feel will benefit from it. In fact, you might want to encourage them to sign up for my free E-Letter at These weekly articles are a good educational tool for staying informed about the markets and current economic issues.

Warmest regards,


Gary D. Halbert


"Gary D. Halbert, ProFutures, Inc. and Halbert Wealth Management, Inc. are not affiliated with nor do they endorse, sponsor or recommend any product or service advertised herein, unless otherwise specifically noted."

Forecasts & Trends is published by ProFutures, Inc., and Gary D. Halbert is the editor of this publication. Information contained herein is taken from sources believed to be reliable, but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgment of Gary D. Halbert and may change at any time without written notice, and ProFutures assumes no duty to update you regarding any changes. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Any references to products offered by Halbert Wealth Management are not a solicitation for any investment. Such offer or solicitation can only be made by way of Halbert Wealth Management’s Form ADV Part II, complete disclosures regarding the product and otherwise in accordance with applicable securities laws. Readers are urged to check with their investment counselors and review all disclosures before making a decision to invest. This electronic newsletter does not constitute an offer of sales of any securities. Gary D. Halbert, ProFutures, Inc. and all affiliated companies, InvestorsInsight, their officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Securities trading is speculative and involves the potential loss of investment. Past results are not necessarily indicative of future results.

Posted 01-31-2012 4:36 PM by Gary D. Halbert
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