As your child takes their first steps into independence, it’s natural to feel a deep sense of pride. Their launch into young adulthood is what you’ve been working towards, whether that’s moving away to college, trade school, enlisting in the military, starting their career or finding another adventure. It’s a milestone and a transition, where some parents may choose to further financially support their children as they navigate early adulthood.
And yet, it’s essential for young adults to develop financial literacy and practical money management. One of the most valuable ways you can help your child during this time is by helping them create a realistic budget, balancing the income they earn and any financial support you provide with their anticipated monthly expenses. Having a clear picture of monthly costs can help both you and your child approach this next phase with clarity and confidence. It can also help you offer financial support with intention and purpose. Here are a few areas where it may be impactful to support your child as they begin to build their financial foundation:
Rent
Rent is the largest monthly expense for many students and young adults. Helping to pay rent can offset a significant portion of a financial burden. Parents may need to co-sign on a lease if their child does not have sufficient income. In some circumstances, it may make sense to explore purchasing a property as a long-term investment and allow your child to use the property during college.
Health Insurance
Health insurance law allows children to remain on their parents’ health insurance until they are 26 years old. If your child is living in the same state as you, keeping them on your employer plan may be the easiest option and a great way to provide financial support. If they are living in another state, it’s important to be sure that they will have access to providers where they live through your plan coverage. No matter where they reside, it’s worth checking what their school, employer, or state marketplace offers, as there may be more affordable options than what your health insurance plan offers.
Emergency Fund
If you want your child to begin to develop financial independence but still want to make sure they have funds to fall back on in an emergency, another option to consider is funding a joint checking account with both of you named as account owners. This will allow them quick access to funds in an emergency but will also allow you to monitor what is being withdrawn.
Family Loans
Instead of making gifts or paying expenses directly, consider providing financial support in the form of a loan. Tax law allows for loans between family members, but it is important to have a written agreement documenting the terms of the loan and to charge a reasonable interest rate to avoid having the loan be considered a gift.
Retirement Planning
While your child’s retirement is a long way off, helping them plant the financial seeds of retirement early in their career can pay huge dividends down the road. They may have earned income but often do not have surplus income to set aside for retirement, especially outside of an employer-sponsored retirement plan. If they are covering their expenses now but you’d like to help get them set up for the future, you can consider contributing to a Roth IRA on their behalf. You can make contributions up to the annual limit ($7,000 In 2025) or their total earned income, whichever is lower.
All the items above (except health insurance) are potentially considered taxable gifts. If you still claim your child as a dependent on your tax return, typically you can pay for their necessary expenses without worrying about gift taxation. If they are not a dependent, you may need to file a gift tax return if you provide financial support exceeding the annual exclusion amount ($19,000 per person in 2025) in a single year. Consult your tax professional if you are unsure whether you need to file a gift tax return.
To further explore these options and what type of financial support would be appropriate for you and your child while considering your personal long-term goals, please consult with your JNBA Advisory Team.
Due to various factors, including changing market conditions and/or applicable laws, some of the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from JNBA Financial Advisors.
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