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The best family finance advice

Be open about money.

“It’s super important for partners to be honest with each other and share everything about their finances. A lot of couples have one personality who is more financially aware and one who is happy to let the other person take care of everything. But that can get dangerous when there is a death, disability, or divorce. The person who didn’t do much financially may not even know what they own or where their assets are. I handle most of the investment decisions in my marriage, while my husband handles the bills, but we do an ‘audit’ once a year, where we review everything and make sure we both can log in to all our accounts. So, neither of us is living blindly, and we know how to do something the other does, if we need to.”

Don’t keep your children’s inheritance a secret.

“You shouldn’t be a lottery to your kids. It’s good for your children or heirs to know what money they’re going to get from you. One of the worst things you can do to a young or middle-aged adult is to have them wonder what they’re going to receive, because then they can’t do their own financial planning.”

Give with a warm hand (part one).

“With people living close to 100 years these days, it might not be the best practice to wait until death to leave an inheritance to your kids, who may be in their seventies and retired at that point. Maybe the best thing you could do for your children and grandchildren is to give some of that money to the parents when that baby’s first born. Then the parents have more resources to either get good day care or go to part-time work themselves to be able to invest more in these little ones when they really need it.”

Explain your financial choices.

“Growing up, we didn’t talk about money in our household. If there was enough money, our parents didn’t talk about it. If there wasn’t, they would fuss and argue. With my own children, who are 11 and 15, I do the opposite; we talk about money in age-appropriate ways so they understand how and why we choose to spend our money. We almost never go out to eat, for example, so we can spend our money on travel and education, which are our priorities.”

Give with a warm hand (part two).

“There’s always this kind of fantasy that you’re going to leave equity in your home to your children, but it is often worth a lot less than you think it is because it hasn’t been maintained, it’s filled with your crap. Your kids would likely rather have had the cash earlier or the financial foresight into how to manage that cash than any kind of surprise lump sum.

So consider inter vivos transfers, which means gifting assets while you’re alive. Work with an adviser to find out how much you can give them now during your lifetime, while also making sure that you have enough for yourself. The other reason your children will like that, besides being able to plan more rationally, is that they’ll know you’ll be OK.”

Talk to your kids about money.

“My dad was very open about money. He felt the best thing you can do is teach your kids about money so that they understand it is a tool. He wanted us to learn how to earn, save, and share money, but also to know how to enjoy spending. He explained life insurance to me as a 10-year-old (in an age-appropriate way.) He taught me to not spend money in the dark, so to not waste money on things like fees or fines. But more importantly, he would tell me: ‘Just because you avoid the conversation, doesn’t mean you’re avoiding the problem.’ I’ve tried to carry on that approach with my own children. I did taxes with them, had them fill out their federal student aid applications next to me as teenagers. We talk about Roth contributions, what sneakers they’re buying.”

Let your kids know pertinent details about your finances.

“We know that most financial predation happens within families, so you can imagine a mother or father not wanting to discuss anything about their finances with their children. But if those are the same people you’re planning to leave money to, then you should want to do it in an orderly way. So tell them where important documents are, what your plan is, but don’t hand over the account number. It’s probably best if you don’t ever hand over finances to a family member, but pay a professional to do it. Most children don’t have the financial education to do so and don’t want the added stress.”

Consider a college’s ROI.

“People have started revolting against college for a lot of good reasons. A four-year degree, it turns out, is not what all people need in order to do really well in their careers. And many would be financially better off not going to a four-year college and avoiding taking on life-changing levels of debt.

Families and students really need to be thoughtful about what kind of education is needed and what kind of debt you’ll accumulate getting a degree. For some jobs, like engineers, lawyers or doctors, it is likely still worth the investment. But for many other jobs, it could not be. And it can be really hard to pay back some of those loans when you’re on a social worker’s or teacher’s wages.”

Don’t pick a college based on reputation alone.

“This idea that you have to go to the best college you get into is not great advice anymore. I think students and parents have to look at college as a value proposition. My younger cousin got accepted into Harvard University, but she took a full ride offer from the University of Delaware instead. Then she was able to use the money her mother had saved in a 529 account as a down payment on a fixer-upper home.”

The best advice for young people

Don’t make things too complicated.

“Don’t worry about money so much, and keep things simple: Stay out of debt. Do what’s right instead of what’s easy. Always put people first before money.”

Start small, but start now.

“Saving small amounts, as early as possible, compounds in wonderful ways. It’s not about the amount; it’s that you actually do it. When I graduated from Princeton in 1991, every single person was asked to give $19.91 to the university. They were teaching us to be givers. It’s a brilliant concept, and I wish everyone would do that with their 401(k) plan. Start with even small amounts and, over a lifetime, that can get very big, very fast.”

Understand the true secret to wealth.

“When we are young, we really don’t understand the power of compounding. Warren Buffett, at 95, has seen his entire net worth double over the last seven or eight years. That’s really astonishing when you think about it. And compounding doesn’t just work with money. It works with habits, with health, with networking, with collaboration. It’s not just about your portfolio.”

Take the slow road.

“There is a narrative right now that young people are completely screwed and that in order for them to catch up, they need to take speculative bets, like getting into prediction markets. True, life costs more now than 20 or 30 years ago. But if you consistently save and invest, you will get where you need to be financially—maybe a little bit slower than your predecessors 30 years ago, but you can still live a pretty comfortable life. The prediction market is essentially just gambling. It’s possible to have a nice life without having to take on that kind of risk.”

Save early and often

“Open a savings account early, and make savings a habit, even if the amounts saved are tiny. My father opened a savings account for me when I was little and doubled any money I placed in it. My mother said, ‘Spend money, but don’t waste it.’ I did the same for my two daughters.”

Save early and often

“Open a savings account early, and make savings a habit, even if the amounts saved are tiny. My father opened a savings account for me when I was little and doubled any money I placed in it. My mother said, ‘Spend money, but don’t waste it.’ I did the same for my two daughters.”

Put money in stocks ASAP.

“I should have started investing in stocks much earlier than I did. Even when I became a financial planner, at first I was only paying my bills and investing very little. I’m 64 now, so if I had started investing in the stock market sooner, I could have been the Mexican Warren Buffett.

Don’t wait to save until you make more money.

“Your financial goals don’t have to wait until you’re out of debt or make more money. You can start to act on them as soon as you earn that first paycheck, even if you have student loans or credit card debt. You may not be able to go full speed at the moment, but you can begin to plant seeds and educate yourself. Your financial goals matter because you matter, and the best time to start working toward them is today.”

Live it up a little.

“Have more fun. Yes, focus on your savings and investment rate, but there are certain things you can only do in your twenties. Do them now!”

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(Image credit: Getty Images)

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