TEN THINGS WE RECOMMEND FOR YOUR SOON-TO-BE YOUNG ADULT

1) Open a bank account: We recommend establishing a checking and/or savings account using kids name
and Social Security numbers also helps build a credit history and teaches responsibility. If kids have an
established credit file by the time they graduate from school, they are much more likely to be able to rent
an apartment or purchase a house when they graduate, rather than needing to move back home.

2) Obtain and learn to use a credit card: Related to the credit report, a credit card is a simple way to start
building credit at a young age. We recommend kids obtain a credit card in their name for several reasons,
Credit cards can serve as a teaching tool for budgeting and credit management. Make sure the card is paid
off in full each month and when kids graduate they will tend to follow this example. Credit cards, rather
than debit cards, also provide advantages such as fraud protection and can earn reward or travel
points/cash back. There are a number of companies targeting kids heading to college with credit offers.
(www.CreditCards.com)

3) Check kids credit files: Why pass-up a freebie? Annual Credit Report is government provided free source
to check credit reports annually. Websites and services like Credit Karma and Life Lock offer ongoing
credit monitoring. For a nominal fee, Life Lock also includes an insurance guarantee of $1 million if your
identity is stolen. We recommend reviewing Credit Reports to verify information is accurate, detect
potential identity theft, and provide a scorecard for maintaining good credit.
(www.annualcreditreport.com) (www.CreditKarma.com) (www.LifeLock.com)

4) Start a Roth IRA: “I wish I would’ve started saving earlier,” is a phrase we hear often. We recommend
kids with earned income make contributions to a Roth IRA – parents can also make contributions to a
Roth IRA on their kids’ behalf. Whether kids are planning to work during college, or are going straight to
the workforce, a Roth IRA is a great way to start savings for the future early. Contribution limits for those
under the age of 50 are limited to $5,500 per year to a Roth IRA where assets can grow for future tax-free
distributions.

5) Adopt basic estate planning documents: Estate planning includes documents to be used during life!
Universities are happy to take a tuition check from parents, but once a child reaches legal adult age
HIPAA and other laws can prevent a University from sharing important information with parents. As
such, before kids leave home for college, we recommend a Durable Power of Attorney (DPOA) and Health
Care Directive (HCD) are in place. A DPOA will allow an appointee to act in a financial capacity, on
behalf an adult child, while they are away at college. With a HCD, kids can designate who can make
medical decision on their behalf should they become unable to tell a Doctor their wishes. Hopefully these
documents are never needed, but for a nominal cost, they become invaluable if they are. Your house and
car have more than one key. Consider who has the second set of “Digital Keys” for online access to
Facebook, email, etc.
6) Create an education distribution strategy: Many parents have saved money for college using a 529 plan or
other Education focused savings plan. Now what? Before kids head off to school we recommend
determining an estimate for the total cost of school and then a specific strategy for paying for those costs.
Are saved assets enough to cover all costs of school – including rent and food or just to cover tuition? Do
savings need to be withdrawn at a certain rate each year, or will they be used to pay 100% of education
costs until assets are depleted? The team at Buttonwood regularly facilitates payments directly to qualified
institutions or by reimbursements through receipts out to parents or kids bank accounts. When
determining the cost of education we use and recommend the “College Navigator” tool through the
National Center for Education Statistics as a useful tool for estimating specific colleges’ costs.
(https://nces.ed.gov/collegenavigator/)

7) Apply for FAFSA / Student Loans: We recommend completing the free application for the largest
provider of student financial aid in the country. After completing the FAFSA application with personal
demographic and financial information, you will be presented with opportunities for student aid, possible
grants and/or federal loans. (https://fafsa.ed.gov/)

8) Look for scholarships: In addition to the FAFSA, there are many scholarship opportunities available.
However, we all know how tedious and time consuming researching and filling out applications can be.
Scholly is a site created to help simplify the process of searching for and winning scholarships. The site’s
creator was actually awarded $1.3 million in scholarships before creating Scholly. (www.myscholly.com)

9) Review insurance coverage: As kids head off to school, we recommend talking with your insurance agent.
a. Auto insurance: If your child is taking a car to college, the price and coverage of your policy may
change based on the city and state your child will live. Also, ask if your insurance company offers a
discount for a student's good grades.
b. Homeowners and renters insurance: Ask your agent if your child's possessions will be covered by
your homeowner’s policy. Some policies cover a student's possessions if they live on campus. For
students living off campus, consider renters insurance, which costs about $8-21 per month. A
landlord's policy will only cover the building, not your kids’ laptop or other possessions.
c. Health insurance: Most young adults can stay on their parents' health insurance up to age 26,
regardless of marital status, financial dependency, residence or enrollment in school. Kids should
take copies of their insurance cards and check their parents' health insurance plans to know which
physicians and hospitals are in their network while away at school.

10) Share with kids your family financial values: We recommend including your young adult in family
financial decisions, especially when it involves them. Allowing your child to sit-in on planning (such as
how the family will pay for college) will help them get a grasp on the real world. If they are financially
responsible, we also recommend having kids write the check to the school. When they see the actual cost,
in relation to their current spending, kids often have a better appreciation for parents’ efforts to pay for
school. Not to mention the opportunity for kids to learn how parents worked hard to reach the financial
position where they have.

Your Family CFO Team

Buttonwood Financial Group
816-285-9000
Info@ButtonwoodFG.com
3013 Main Street, Kansas City, MO 64108
ButtonwoodFG.com