Your Child Just Turned 18 — 5 Financial Mistakes That Can Cost Parents Thousands

Jason Matthews |

Yesterday, my son Kai went to his best friend's national letter of intent at his school. (Gradulations Jacob). For him and thousands of other families across the country. This can be an exciting but yet very nerve wrecking ordeal. As; our kids are turning from little kids who needed our help to young adults. I am only a few months away from this situation myself. 
 

Even if they act like adults they still need our help just like they were 5 years old. The mistakes they make can cost us thousands or even millions of dollars. Today's blog post which I will be covering on KTVU Mornings on 2. 5 Financial Mistakes That Can Cost Parents Thousands

 

 

Car Ownership
Car ownership gives our kids the freedom to move without waiting for us. It can be a relief for us but also for their family. It has helped me big time. But; the first thing we should do when our kids turn 18 years old is change the title of their car into their name. Why???? Because; if they were like me when I was 18 they would think they know everything but are dumb as rocks. Being dumb as rocks you do dumb things.You can be held financially liable. 
 

About a year and half ago 4 kids in Piedmont were in a car drunk and high. 3 out of 4 kids died in a car accident. What did the families of  the kids in the car do? They sued the parents who owned the car. ! Now those people not only have the heartbreak of losing a child  but the possibility of losing everything can lose everything.


That’s why I always recommend the following:

  • Transfer ownership of vehicle
  • Review liability coverage
  • Give children unlimited Uber rides


Not only changing the title of the car. But also; give your child an unlimited Uber Account. So, if they have just one drop of alcohol you tell them to leave the car there and hop in the Uber. 


Now some people will say I have a really good insurance policy to cover that. But; if you are drinking and driving that is a felony. The insurance company will immediately void that policy. Here 



Turning 18 = Legal Adult (Parents Lose Control) 

A few years ago one of my clients' kids turned 18. He was young and healthy and played on the sports team. Then all of a sudden his lung collapsed. Since he was 18 years old the hospital no longer considered him as a child. The parents didn’t have any say in this super dramatic life or death situation.
 

Since then we make all of our clients have their kids come to our office and do  Advance Healthcare Directive along with Durable Power of Attorney. So, just in case god forbid something does happen your child is protected.

 

 

Tax & Dependency Confusion 

When our child turns 18 it can cause a lot of confusion when it comes to taxes. Do, they still file them on my taxes, due they file on their own. Should they even file? It causes a lot of confusion and can increase our chances of seeing the IRS or Uncle Gavin.
 

If your child has the smallest job they should always file their taxes. It will help them with their Social Security and oftentimes they will get some type of refund. As; long as they don’t hit certain income thresholds and you provide more than 50% of their care. You can file them as a dependent on your tax return. But, as soon as they hit certain thresholds, move out or stop going to school they can no longer be considered a dependent. 

 

Credit Mistakes Start NOW 

Back in my day when you were on college campus you saw credit card companies everywhere asking you to apply for credit. Many students got a credit card and ran it up. Once they ran it up they hit their limit and had bills they couldn’t pay. If they were lucky mommy and daddy helped them out. If not they were screwed.
 

So, the key is to educate our kids on the pro’s and con’s of credit. Making sure they understand the importance of it. Another thing we can do is add our children on our credit cards as authorized users.. It will give them a leg up in life. By picking off of our fantastic history. So, they can have better credit than someone who is starting at square one.



Planning for the Transition to Adulthood 

Turning 18 is a huge shift as our kids are turning into adults. Not only for children this is a huge shift for the family.

  • Legal 
  • Financial
  • Tax
  • Risk Management
     

The key is to plan ahead to make sure you avoid all of the potential risk that could devastated you and your family lifestyle. 
 

If you’d like help making sure you have everything in place as your child transitions into adulthood, you can schedule a time with us here: 
 

https://calendar.app.google/4fCHM9SNMr3CuUSj7


Sincerely,
 

Jason Matthews