We all want to see our children and grandchildren achieve whatever their hearts desire. Unfortunately, for the first time, it may no longer be an achievable goal that this generation will do better than the one that came before.

Last year, in a Pew study, 68% of Americans said they think today’s children will be worse off than their parents. Is it the end of the American dream?

Even in the best economy, young people often start their adult lives with almost no understanding of essential money management. College-aged students have interned at my office for over 20 years, and I have witnessed the perils of young adults sheltered from economic reality.

Some were unable to postpone instant gratification and threw away their college education and a bright future for jobs that paid tips to experience a better standard of living temporarily.

Students who are unable to budget, understand agreements (especially with landlords and roommates), or lack enough financial assistance from their parents, live in their cars and cannot afford books and food. The Hope Center reported in 2020 that three out of five college students reported food or housing insecurity, and 14% of college students were homeless.

Some college seniors majoring in business have no idea how a pension or a mortgage works. They claim they did not learn about it in school, which is probably true. Schools teach about health and driving safety but nothing about personal finances. Students also state their parents wanted them to focus on their studies, so they never had a part-time job, and their parents never discussed money.

If you want your children to succeed (and not suffer), it’s more important than ever to teach them how the economy works and how to manage their finances. Do not wait until your kids are moving out to talk about it.

Here are some ways to start early and make it a positive experience.

Biz kids

One of my favorite resources is bizkids.com. Many episodes are posted from the long-running series on PBS, from “How to Get Money” to “The Art of Negotiation” and “Your First Big Purchase.” There are also lesson plans for junior high and high schoolers, and the programs are entertaining enough for you to watch with them.

Hire your children

If you or your spouse are self-employed, you can put your children on the company payroll as soon as they are old enough to help.

Payments for services performed by a child under age 18 are not subject to Social Security, Medicare, or unemployment taxes, as long as your business is a sole-proprietorship, a single-member LLC taxed as a disregarded entity, or an LLC taxed as a partnership and owned solely by you and your spouse.

Your child can earn up to $12,950 a year and owe no tax on the income, and you can deduct their wages from your income. There is no age or work permit requirement in California for a child who works for their parents.

Your children will learn valuable work skills and how businesses work. You are giving them money anyway: It might as well be deductible.

Some examples of services they can perform are cleaning offices or company vehicles, doing data entry, sorting paperwork and making labels, modeling for promotional materials, and updating social media accounts.

For additional details, refer to the IRS Publication 929, Tax Rules For Children and Dependents.

IRAs for kids

If you add your kids to your payroll, they also become eligible to contribute to their college fund, with additional tax benefits, using a traditional or Roth IRA or a 529 plan.

For example, if a child contributes $6,000 to a traditional IRA, they can earn $18,950 annually without paying income taxes.

College is expensive, and it may negatively impact your finances if you neglect to discuss college planning with your child. Many parents are forced to defer their retirement and re-mortgage their homes to pay for their children’s higher education. You are also setting your kids up to not finish college by not planning early and involving them.

Why wait until your children are high school juniors to choose potential colleges and plan how to pay for it? If you start when your kids are in the seventh grade, you have six years to discuss finances and work together to research and apply for financial aid and scholarships. Start with purchasing books about different colleges, scholarships, and financial aid. Your Certified Financial Planner (CFP) should also be a great source of information about planning for college costs and 529 plans.

Family limited partnerships

The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of is an amusing and practical book to involve your child in investing for college and beyond.

A more advanced, collaborative (and possibly profitable) way to support your kids’ or grandkids’ futures that may offer some tax benefits is to consider setting up a Family Limited Partnership. An FLP is an arrangement in which family members pool money to manage their investments, including real estate and businesses.

Under a typical FLP arrangement, the parents are the managing partners, and the children are the limited partners. The parents make the final management decisions, but children are encouraged to participate in the process. (The family may even decide to have formal meetings.)

The parents contribute assets to the FLP and then gift or sell shares of the FLP to the children. The maximum value of shares in 2022 that each parent can give to each child annually without filing a gift tax return is $16,000.

An FLP can start with minimal investment, as long as the income is enough to pay for the income tax preparation and $800 annual minimum state tax. If you have more assets, FLPs are also used as an estate and income tax planning tool for families to transfer wealth between generations.

Families also use FLPs for asset protection. You can protect your children’s assets (especially as they start driving) from lawsuits and other losses by sheltering them in an FLP. For additional advice about FLPs, consult your tax attorney or certified public accountant.