What Your Kids Need to Know Before Their First Paycheck

At Summitry, we’re not just here to manage wealth — we’re here to help you grow and preserve that wealth confidently from generation to generation. Many of our clients express concern about their children stepping into the “real world” without the skills or knowledge needed to manage their finances effectively. A question we hear often from clients who are approaching or in retirement is: What will happen to the significant wealth we’ve created when it transitions to the next generation? Will our kids know what to do with it? 

This is the heart of our Next-Gen Initiative — focusing on helping younger clients gain confidence and clarity with their finances before they earn, save, invest, and potentially inherit meaningful wealth. We understand that this process starts at home, and we are here to provide support, guidance, and resources. 

So, parents: 

Are your graduating children equipped with the financial skills not just to get by — but to thrive? 

Here are five essential financial lessons your children would benefit from knowing more about before they enter the workforce: 

     1. Budgeting Isn’t Just a Tool — It’s Peace of Mind 

Budgeting isn’t about saying “no” to every latte. In fact, most young adults have dabbled in budgeting — whether it’s tracking expenses with apps, saving birthday money, or sticking to a college allowance. But once they get their first paycheck, they’ll quickly realize how fast it can disappear — between taxes, rent, groceries, subscriptions, and social plans. 

A simple framework helps: the 50/30/20 rule (for after-tax income): 

• 50% for needs (rent, bills, groceries) 

• 30% for wants (dining out, hobbies, travel) 

• 20% for savings (emergency fund, investing to buy their first home, retirement) 

The key? Budgeting creates confidence. It’s not about deprivation; it’s about having a plan and feeling in control — knowing where their money is going and why. Encourage them to use a budgeting app like Rocket Money, or even a simple spreadsheet. Knowing they can cover their needs and still have room for fun and their lifestyle is liberating. 

2. Credit Cards Are Powerful — But Only If You Use Them Wisely

Many young professionals open their first credit card right after college, excited by the idea of points and perks. But without the right habits, those cards can spiral into “bad” debt. 

Here’s what they need to know: 

• Always pay the statement balance in full. Carrying a balance leads to high interest charges (25%+), and those fees add up quickly. 

• Review statements monthly to catch fraudulent charges and avoid surprises. 

• Start with low or no-fee cards like the Chase Freedom Unlimited® or Citi Double Cash® Card. 

• Use the Bilt Mastercard® to earn points on rent — a major monthly expense for most young adults. 

Credit isn’t just about buying power — building strong credit early can open doors to better loan rates, apartment approvals, car leases, and financial freedom later in life. 

3. Free Money Exists — and It’s Called an Employer Match

Many recent grads don’t realize that when they start a job with a 401(k), their employer often offers to match a portion of their contributions. That’s essentially free money. 

Encourage your child to: 

• Contribute at least enough to get the full employer match. 

• Choose Roth contributions early in their career, while their tax bracket is low, to enjoy tax-free growth later. 

Starting contributions early at 22 or 23 can mean six-figure differences in retirement savings. This isn’t just about retirement — it’s about building wealth and habits that compound over time. 

4. An Emergency Fund Is the Real Safety Net

One of the biggest shocks for young adults is facing unexpected expenses: a car repair, medical bill, or even job loss. If they’re living paycheck to paycheck, these emergencies can be devastating. 

Help your child build resilience by: 

• Saving 3–6 months of living expenses in an easily accessible account. 

• Using a high-yield savings account or money market fund to keep funds liquid while earning interest. 

An emergency fund isn’t just a safety net — it’s freedom. It allows your child to take career risks, move cities, or handle life’s surprises with confidence. 

5. “Later,” the Most Expensive Word in Personal Finance

Many young adults think investing is reserved for when they “have more money.” But waiting means missing the most valuable resource they already have the most of: time. 

Here’s what they should know: 

• Even small amounts invested early can create massive momentum and generate meaningful compounding returns. 

• Start with low-cost index funds — there’s no need for complex strategies or stock picking. 

• Use tax-advantaged accounts like Roth IRAs or 401(k)s to maximize growth. 

• Investing is a long game: the earlier they start, the more they’ll have later. 

Investing isn’t just for the wealthy — it’s for anyone who wants to build a better future. 

Ready to Set Your Children Up for Success? 

At Summitry, we’re here to help you and your children take control of their financial future by grounding financial decisions in your values and goals. 

If you have a graduating child — or one who’s already working — let’s start the conversation. Together, we’ll equip them with the skills, knowledge, and confidence to thrive in their next chapter. 

P.S. If you enjoyed this piece and would like a child-facing version to share directly with your son or daughter, let your Summitry advisor know — we’d love your feedback and can tailor one just for them.