Given economic instability, stock market uncertainty and our clients' worry over whether they'll be able to retire, it's hard to imagine anything good coming from last year's financial chaos. But looking through a different lens, we ask if we can learn from this—or better yet, can we help our kids learn from it? How can clients prepare children for their own financial future? This is the second article I've written on clients and children. The first dealt with young children; this one is for young adults.

When the economy soured last year, I found a whole new level of respect for my parents and the financial values they taught me. I was a latchkey kid, growing up in the suburbs with two brothers and a sister. We learned to entertain ourselves, which was fun; on the other hand, we quickly learned to dislike the TV dinners our parents left for us. In fact, we complained so much that one summer my parents decided to give us each one-sixth of the weekly grocery bill and put us in charge of buying our own food.

After two weeks of gorging on chips, soda and Twinkies, we knew it was time to get serious. We learned to make a shopping list, budget, review bills, cook, clip coupons and negotiate with one another about sharing milk, juice and cheese. As a result, my mom became an instant celebrity among the working mothers in the neighborhood, and we, the kids, learned a lifetime's worth of skills in taking responsibility and assuming control of our finances.

We've all heard similar stories and understand that simple ideas can teach and transfer wisdom from generation to generation. As an advisor, you're in a wonderful position not only to assist clients, but also to provide guidance to their offspring who are starting their own financial lives. Young adults with solid financial skills and a history of discussing financial issues are better prepared to tackle the challenges they'll face as adults. Who knows? Maybe we can create a new generation of responsible investors, or, dare I say, future ideal clients.

TEACHING MATERIALS

A productive way to introduce financial topics may be to create checklists or a small workbook based on the 10 topics discussed below. As you read on, note that I intentionally left out the more granular level of planning. It's up to you to establish how deep you want to go with each client and his or her child.

Keep an accurate budget. This is one of the biggest issues for young professionals. Overspending and being unable to climb out of debt can have a lasting impact on savings and future behavior. Crucial to maintaining a budget is learning to pay one's self first. That is, before paying bills, buying groceries or doing anything else, the young adult should set aside a portion of earned income to save for the future. The first bill paid each month should be to him- . Inevitably, he will learn to live on less while building wealth.

Since clothing and eating out are among the largest expenses for young adults, at the start of each month or quarter, he should develop an allowance to keep the annual budget on track. Getting into this habit early can help young people build considerable wealth.

Get organized. Maintaining a file system (online or on paper) for all financial matters (e.g., 401(k) statements, bank statements, taxes) is another good habit to start early. Although just beginning their careers, young adults have many important documents that should be centrally stored for easy access.

Learn about taxes. Taxes will always play a role in everyone's future, so having knowledge of taxes and tax returns can lead to benefits. Whether it's investing and understanding the impact of investing in IRAs, 401(k)s or home ownership, maximizing the before- and after-tax treatment can truly add up.

Consolidate debt and destroy old credit cards. We all know the dangers of owning credit cards and not being responsible. To avoid getting into overwhelming debt, younger adults may want to adopt the practice of paying with cash and/or destroying old credit cards, especially ones not used regularly. Paying with one card and consolidating purchases onto one with a lower interest rate can better position anyone for the future. It also can't hurt to suggest waiting 24 hours to purchase items that cost more than $100.

Keep credit score high. Reviewing credit scores will prove valuable when borrowing money or obtaining a mortgage in the future. According to the Fair Credit Reporting Act, consumers are entitled to receive one free credit report, which can be requested online, from each national consumer credit-reporting company annually. Understanding the impact of the credit score can benefit young investors immediately. In addition, because younger investors may need to rely on debt, knowing credit scores and how to improve them can save thousands over the long term.