Supporting Your Adult Children: Are You Helping or Hurting?
by Sandra W. Larson, CFP®
Making certain that our children are okay is inherent to maintaining peace of mind for any parent. When our kids are young we pay for everything they want or need. As our children get older, we need to make certain that the support or gifting we do is not doing more harm than good.
For those of us who are fortunate enough to have a little extra, we think nothing of sending a few hundred or thousand dollars to our children to get them over a “rough patch.” It is our right to help our adult children in this way… but it is NOT OUR OBLIGATION. Our job as parents is to raise children who are financially responsible and able to manage their income, savings, debt and financial goals.
During my tenure as a Certified Financial Planner™, I have met many parents who continue to pay basic expenses for their children well into their 20s and 30s. They talk about their children as if they are disadvantaged in some way if they cannot live at the same level as their parents. Even though the parents have spent years working, saving and creating a decent lifestyle for themselves and their family, they somehow feel that their children are being cheated if the children must struggle at the beginning of their adult life as the parents did.
The crux of the issue is that developing good financial acumen comes only with learning what works and what doesn’t for each individual person. How much to budget for basic expenses like rent, food, phone, car and car maintenance, gasoline, utilities, entertainment, monthly savings for emergency reserve, etc., takes thought and an assessment of what effort must go into earning the income necessary to support the lifestyle we want. The earlier we develop good financial management systems, the better off we are throughout our life.
When we are young, we must decide what type of job we want to do. Some people feel “called” to something like medical training, teaching, computer and technology, engineering, marine biology, veterinary medicine, etc. Other people just look to see what is “out there” and prepare themselves accordingly.
I once had a high school aged girl whom I coached at church basketball. She was living a lifestyle that would most likely end in tragedy, and she was brave enough to look for help sorting things out. I asked, “What do you want to do for a living?” She replied, “I don’t know.” So, I set about asking her what kind of car she wanted to drive, where she wanted to live, what kind of clothes she thought she would want to wear. Of course, everything on her list was on the luxury list. I applied a price tag to everything that she mentioned and instructed her as to how to identify the cost per year to live that lifestyle. I told her that clearly earning $10 an hour at the local fast food restaurant would not accomplish her goals. She needed to look to at least a Bachelor’s degree if not a Master’s degree to earn the money necessary to “buy” that lifestyle. We talked about the types of jobs that created the opportunities she was looking for and that she would have to WORK HARD to achieve at the level to accomplish her goals. The good news is that she did make great changes!
Many years later I received a note from her with a picture of her, her husband and 2 kids. Whether she achieved her 16-year-old goals is less important than the fact that she chose to be successful in the choices she made after our “talk”.
Help protect the legacy they may inherit from you by teaching them how to manage money early. History abounds with stories of children inheriting wealth from their parents only to lose everything by not respecting the gift they were left. Since your children may inherit a nice sum when you pass away, make certain they honor your hard work by teaching them to understand the power of financial freedom and getting the best utility from the money or assets you will leave in their care.
The most important thing in helping our children, grandchildren, family friends, whomever you may choose to help is to make certain you are the bridge. Don’t take away the responsibility of day-to-day financial and budget management from your loved ones. There is a great feeling of success that comes from being able to pay for your essential expenses and provide for great discretionary goals like vacations, upgraded cars or whatever your latest dream happens to be by yourself. Teaching your kids how to prepare, letting them scrimp and save, allowing them the freedom to know that they don’t need to satisfy every spending whim that flashes across the TV screen, helping them to make good financial decisions with their budgeting, and allowing them some failures early is one of the greatest gifts you can give them.