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Wealth Planning

Help your teens and young adults get on the financial right track

Make “financial fitness” part of their back-to-school program with these simple exercises.


Parents and other family elders: This fall, you may have a once-in-a-lifetime opportunity as teens and young adults head back to school, in-person, after having spent months at home during the COVID-19 pandemic.

You can take this “fresh start” to help your young people shape their financial lives, ensuring they are on the right track.1

To help, we suggest some actions you might take to help your family members avoid (or at least mitigate) a few, key human tendencies to which people in their teens and early 20s are especially susceptible: “opportunity costs,” “social proof” and “relativity.”

These behavioral science concepts can be defined easily enough. The challenge lies in recognizing these tendencies and not letting them derail us. Such self-awareness can be particularly critical for people who are young, have significant wealth and live among the well-to-do.

Fortunately, our specialists offer some insights and concrete ways you can help your loved ones.


Opportunity costs

While the basics of opportunity costs are easily understood (that when we use money for one thing, we cannot use it for something else), people often fail to fully see and consider tradeoffs. This big picture evaluation can be especially difficult for teens and young adults who may be unclear about their priorities and who lack sufficient knowledge of the world. Moreover, for young people in wealthy families, the question of “financial resources” can get tricky.

We might be able to afford whatever our children might like to spend, but avoiding limits may be unwise if we hope to cultivate adults capable of making sound financial decisions. After all, even great fortunes can be outspent over time, and even billionaires make financial choices.

To teach good decision making around spending and tradeoffs, our specialists suggest these exercises:   

  1. Do an accounting—Show your teens/young adults as much as you can of what it takes to support them. This clear picture of how much their current lifestyles actually cost might be one of the most important lessons you could teach them. It may give them a clearer idea of what career and financial/lifestyle choices and tradeoffs they may later need to make if they wish to maintain their standards of living.
  2. Empower your young people—Identify the expenses you want them to manage, and set up regular payments into their individual checking accounts sufficient to cover these expenses. In addition to individual discretionary and fixed spending, you might consider asking teens to manage their car insurance, all clothing and personal grooming costs, as well as expenses for extracurricular activities. With college students, you also may want to put them in charge of their basic food budgets, school supplies and individual vacation expenses. Be clear that the amount you’re giving is fixed, but your teens/young adults have autonomy over how to spend it on the various categories that it’s intended to cover.
  3. Hold them responsible—This action may be hardest and most necessary of all. Odds are your children will make mistakes. For example, they may blow through their month’s allotment in the first couple of weeks and have nothing left to spend on things like a last-minute weekend getaway with friends at the end of the month.  Do your very best to let them experience (some) consequences (without bailing them out, and within reason, and according to your values). One way to remove the potential parental judgment out of conversations about their financial decisions: Suggest that they ask themselves “How am I choosing to spend my money and why?”—and let them know that their answers can be for them only.  


Social proof  

Most people are influenced by how they believe others like them are behaving. While it can be very helpful to know what others in our circumstances are actually doing, it can be harmful to follow the crowd or latest trend without considering our personal needs and reality.

Obviously, teens and young adults are more likely to follow the herd to their detriment. And such harmful social proof may have grown more potent during the pandemic, when their peers’ social media posturing may have replaced the face-to-face interactions that often provide some reality checks. 

Interestingly, our specialists say external influences tend to be strongest on the young when family culture is less clearly defined. This is why they suggest:

  1. Be very clear, and positive, about your family’s values. State aloud to your children: “In our family, we value (fill in the blank), and this is why we do (fill in the blank).” So what are your family’s priorities? Travel? Entrepreneurship? Wealth building? Security? Community? Education? Philanthropy? Something else?
  2. See if your actions (which communicate your values to your children) support your stated priorities. One way to check is to look at where you have spent your money and time (both before and during the pandemic). If you find a difference between stated and lived values, or are unclear how to best articulate your family values, you might ask your J.P. Morgan team to share what they see other families in your circumstances are doing—and review whether those choices suit you. 
  3. Develop a family motto that reflects your values. Having a family motto can clarify your messaging and reinforce desired behaviors. You may even ask your children to help wordsmith it. To get you thinking, here are a few family mottos we’ve seen:

    In our family, experiences matter more to us than things.
    Work hard and be nice to people.
    We value faith, family and fun over everything else.
    Individual in talents—unified in family spirit.



Too often, people judge something based on its “relative value” rather than its “true value” (where true value is how much something actually costs and what it is really worth to us).

One common trap is to justify a purchase simply because it is on sale, making it seem more appealing. Or, say that everyone you know drives the equivalent of a high-end car, or all the handbags where you shop have steep prices, then a mid-priced car or more modest handbag can seem—in comparison—like a more prudent choice. Percentages can also trip us up: People are often more impressed by a 10% return on a $100,000 investment that yields $10,000 than by the 3% return on a $5 million investment that yields $150,000. 

To help your children pay attention to true value versus the illusion of “relative value,” we recommend creating an ongoing dialogue with them, and we offer these two ways to jumpstart such conversations:

  1. Discuss everyday purchases. Food and over-the-counter pharmaceuticals are good areas of focus. For both, the markup for packaging and branding can be dramatic, and easily demonstrated; just take a moment to look and compare ingredients between the high-end and generic options.    
  2. Share with your children your decision-making process when purchasing big-ticket items, highlighting what does and does not hold value for you.


We can help

So that you may be clear with your young people about family resources and your expectations for their behavior, your J.P. Morgan team can help you refine your long-term goals. We also can help you educate your children in financial and investment literacy. Moreover, if you’d like help defining your family motto, please ask your J.P. Morgan team for your copy of our publication Family Governance: How will your family sustain its wealth? Planning for effective stewardship across generations.

And if you’d like to see what you might do now to create your fresh start, be sure to read How to turn the economy’s reopening into your financial fresh start.


1.School openings may be delayed due to the Delta variant. Nevertheless, school years will start, and they will offer some semblance of a fresh start for children. 




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