Financial identity is critical to success for young adults. The transition from teenager to adult is when we begin to formulate and solidify our character, our beliefs, and our life goals. It’s a significant, often tumultuous, time in life. Family, friends, culture and current events all play a role in how young adults come to understand themselves. Having self-awareness of who you are — of your identity — helps young people navigate the many demands of adult life. It helps provide a sense of control and purpose.
Young Adults and Financial Identity
Understanding your financial beliefs – or financial identity – helps inform decisions for money management. It provides insight about what you need to become financially self-sufficient, an important goal in the transition to adulthood. As a parent of college-age children, this topic is especially meaningful to me. I know each of my kids must forge their own way into adulthood. And making financial decisions will be a big part of that journey.
Brad Klontz, PsyD, CFP® is an expert in behavioral finance. He and fellow researchers identified four common attitudes toward money: Worship, Avoidance, Vigilance and Status. These beliefs are often developed early in life and are frequently passed from one generation to the next. (For more detail, read Lupe Camargo’s article “Understand Your Money Script” at the link below.)
Understanding what influences your decisions can help you better plan for the inevitable twists and turns in the road. While there’s no singular handbook for “adulting,” there are many tools and resources that can help point out the best path for you.
Perhaps you’re at the beginning of your career or independent life. Maybe you know a teen or young adult at that pivotal point. Either way, your financial advisor can help you find the resources you need.