As parents, it’s our job to wean our children off things as they get older and more independent:

• Pacifiers
• Bottles
• Crying at the grocery store when they can’t get the Hot Wheels they want.

But our job doesn’t end there. We also need to wean them off financial support.

Here are some startling statistics:

• On average, parents who financially support their adult children give them $1,000 per month for expenses like food, health insurance, rent, cell phones, tuition, and even travel.
• Parents who are still working and supporting their adult children spend 23% more on their children’s expenses ($605 per month) than they do contribute to their own retirement or savings ($490 per month).
• If their adult children needed financial help, one in four parents said they’d pull money from their retirement accounts and 22% said they’d delay their retirement in order to provide support.

We get it. As parents, we want to jump in and fix when our children hit a rough patch, no matter their age. But there are several problems with allowing yourself to be an easy ATM for your kids to access.

 

You’re Not Doing Them (or You) Any Favors

By handing over money whenever your kid asks for it, you’re creating a dependency issue. Getting finances in order is an important adult skill to have and while it might fall under the category of “tough love” to say no, think of the confidence your adult child will gain by standing on their own two feet.

Not only that (and not to get too morbid) but there will come a time when you likely won’t be here to lend financial support. If you don’t start working on this dependency issue now it could negatively affect your child down the road when you’re no longer here to help.

It’s also important to remember that while kids can take out loans for things like school and major life purchases, you can’t take out a loan for retirement. If you continue to finance your adult child’s lifestyle now, you’re the one who might be in a tough financial spot later.

 

How to Cut the Financial Cord

As with a lot of financial matters, fixing this likely comes down to better communication. While most of us were raised that financial matters are private, there are benefits to communicating with your adult children about your own financial situation.

These conversations can also include how you built your savings over time. Leading by example is a great way to teach your children that you likely didn’t do everything you wanted to do when you wanted to do it; you had to make choices and save in order to create a stable financial life.

It’s also important to point out that if you continue to support them beyond your own comfort zone, your financial support could fall on them at some point. “If I continue to give you money, I will probably be living with you by the time I’m 80 because I won’t be able to support myself,” could be a wake-up call.

 

How a Financial Planner Can Help

We recognize that these conversations can be emotional and difficult; again, no parent likes to tell their own child, “I can’t help you.” Here are some ways an impartial third party – like a financial advisor – can help.

• The earlier you set ground rules, the better off you’ll be. While financial education should start early on, we know that that doesn’t always happen. However, it’s never too late to set boundaries. You might even consider creating a timeline of support – something your financial advisor can help you with.
• If saying “no” is still difficult for you, a financial advisor can help. This might give you a bit of an “out” with your children: “My financial advisor said I can give X amount per month and that is all.”
• You can also help your child set money goals or specify where your contributions will go. Rather than just handing over money to pay a credit card bill, you can set parameters like using the money for career development. Again, a discussion with your financial planner might be a great place to start.
• While going through the transition of stepping back, it’s important that your kids remember that struggle is part of life and often leads to more growth. Yes, they’ll have to make changes, but those changes will lead to a much better outcome. If continuing conversations with an advisor would help get them on the right path, that could be something you consider financing in the short term.

It’s important to remember that your financial advisor is there to not only help you manage your investments but to also help you achieve your goals – and sometimes dealing with family financial issues could be part of that support. CLICK HERE to make an appointment and we can start looking at the big financial picture, including your family dynamics.