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What To Think About When Your Child Reaches Age 18

What To Think About When Your Child Reaches Age 18

Financial Planning

Your child’s 18th birthday may be just as momentous a milestone for you as it is for him or her. Ostensibly grown-up, at least in the eyes of the law, your child may or may not be ready to assume the financial responsibilities that come with adulthood. This checklist contains a number of basic points you might want to implement or discuss with your child before he or she turns 18.

Day-to-day finances

  • Help your child open a checking account in his or her name but add your name to the account for ready access, if you need it.
  • Make sure your child obtains a debit card that is linked to the checking account for expenses and ATM use.
  • Talk to your child about the importance of establishing credit and compiling a solid credit history. Help him or her apply for a credit card in his or her name but make sure your child understands that the card is to be used sparingly and must be paid off every month.
  • Agree on an amount that you will deposit in your child’s checking account each month. Make sure your child understands that this amount is the maximum that he or she is expected to spend during that period.
  • Take a similar approach with your child’s cellphone. Set targets by telling your child not to use more than the talk, text and data limits in your contract.

Budgeting and Saving

  • Help your child create a simple budget. You already know how much money you’re going to place in his or her checking account each month. Now help your child set realistic monthly spending targets. Setting up a free account on www.mint.com might help you formalize the process.
  • If your child is planning to work part-time while in college, arrange for direct deposit, if possible, into his or her checking account.
  • Help your child establish a Roth IRA if he or she is working and earning income. At this point in their lives, children may not be able to afford to make the maximum Roth IRA contribution, but you can match their contribution up to $5,500 a year or the lesser of your child’s earned income. 
  • If you help your child establish a Roth IRA, educate him or her on the basics of investing. Your Lenox Advisor can assist in facilitating the conversation if needed.

Legal Considerations

  • If your child has a UTMA or UGMA account, it’s time to designate him or her as the outright account owner.
  • Review your life insurance policies for which you intend your child to be a beneficiary. When a child is under the age of 18, he or she can’t receive life insurance proceeds directly. You must appoint a guardian and if you don’t, the court will appoint one. At the age of 18, however, children in most states are allowed to receive life insurance proceeds directly. Determine whether you wish to name your child as beneficiary or perhaps establish a trust for the benefit of the child, if you feel that he or she is not yet capable of managing an inheritance.
  • Talk to your attorney about drafting a healthcare proxy that provides you with the right to receive medical information about your child and make medical decisions on his or her behalf.
  • While you’re at it, ask your attorney to draft a Power of Attorney that enables you to intercede and make not only medical, but financial and legal decisions on your child’s behalf. 

It’s an exciting time in both your lives

Turning 18 represents a major change in the life of your child…or should we say fledgling adult. Visit our Find a Financial Advisor page to connect with or find your Lenox advisor. And, of course, if you have any questions about any of the suggestions listed here, please don’t hesitate to contact us.


Lenox Advisors, Inc. (Lenox) is a wholly owned subsidiary of NFP Corp. (NFP), a financial services holding company, New York, NY. Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC. 90 Park Ave, 17th Floor, New York, NY 10016, 212.536.6000. Fee based planning services are offered through Lenox Wealth Advisors, LLC (LWA), a registered investment adviser. Services will be referred by qualified representatives of MML Investors Services, LLC (MMLIS). LWA is a subsidiary of NFP and affiliated under common control with Lenox. Lenox, LWA and NFP are not subsidiaries or affiliates of MMLIS, or its affiliated companies. CRN202112-257707



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