Support Your Kids and Protect Your Own Financial Security, Too
It’s normal to want to do everything in your power to better the health, safety, and security of your children – even as they enter adulthood. For many parents, this translates into ongoing financial support. In fact, in recent years, there has been an increase in the number of adult children who depend on their parents for varying degrees of financial aid. While supporting your children is an important part of being a parent, it’s critical to create a healthy balance that allows you to maintain your own financial security, too. Below, I’ll discuss strategies to help you teach adult children financial independence.
Value Independence, Not Reliance
Whenever you’re faced with the choice of whether to assist your adult children financially, ask yourself this question: “In this situation, does my financial support act as a ramp towards financial independence, or is it prolonging their dependence on me?”
Try to find ways that you can provide them the support that will carry them far rather than offering continuous aid consistently. For instance, instead of paying for their rent year after year, consider helping them get together a down payment that they can put on a home, which will give them a leg up and help promote their own financial freedom. Helping your child in this way not only pushes them into a position of responsibility but also provides them a certain amount of protection and stability from which they can build the rest of their financial life.
Other ways that you could teach adult children financial independence include offering to help them pay for secondary education so that they can avoid taking out loans, helping them to purchase their first car, or offering some financial support as they relocate for a new job.
Set and Maintain Boundaries
Setting boundaries can be incredibly difficult, especially when your loved ones are concerned. However, it’s necessary for your own health and happiness. If you find yourself compromising your own financial security to help your children, or you’re simply uncomfortable with how much assistance you’re providing, then it’s time for you to sit down and lay out boundaries. Let your children know that there are limits to what you will provide. Though it can be an uncomfortable conversation, it’s an important step if you want to teach adult children financial independence and responsibility.
Practice Tough Love
This is another difficult step, especially if you’ve been in the habit of providing whatever assistance your children ask for. If you’re offering an adult child financial support but see them making no effort to gain their independence, then some well-meaning tough love may be in order. Your children may not realize they’re taking advantage of you, so forcing that conversation can motivate them to take action in their own lives while also providing some clarity on what your future assistance will look like.
Don’t Give More Than You Can Afford
The number one rule when it comes to supporting your adult children financially is to never give above your means. No matter how tempting it can be to ease any stress your children may be dealing with, doing so at the expense of your own financial future is never a good idea.
If you have children who are still depending on you financially, sit down with your financial advisor and look at your retirement plans in relation to whatever financial support you’re giving. Determine a budget that allows for you to help your children while also continuing to work towards your own goals. It’s important to think about the fact that, even if you can afford to give money to your kids, that money also has considerable growth potential if it was invested into your retirement accounts instead.
Set an End Date – and Keep It
It’s important for your children to know that they cannot rely on your financial support forever, so work together to develop an exit strategy. The best way to go about this is to discuss it as a family, openly and honestly, and to revisit the conversation regularly to be sure that everyone’s expectations remain in check. This allows you the opportunity, to be honest with your kids about how supporting them is impacting your own financial goals, while also coaching your children on what financial responsibility looks like so they can take control of their own futures.
Are You Working to Teach Adult Children Financial Independence?
The message of this article is not that it’s a mistake to support your adult children financially. Rather, it’s that you should do so strategically, with both their futures and your own in mind. It can be enlightening to look at the actual numbers and ensure your monetary support isn’t dangerous for your own financial security. Sitting down for a discussion with a financial advisor your trust can also be a useful step as you teach adult children financial independence.
At Resolute, we help our clients balance all their financial goals, including those that allow them to help and support family members. If you’d like to discuss a strategy for your ongoing financial assistance or more tips to teach adult children financial independence, please contact us today. We look forward to hearing from you!