Any discussion about family and money is bound to take a turn for the awkward sooner or later, but the increased financial dependence of adult children on their parents is a significant issue that begs to be addressed. Whether you are a parent fueled by love, or an adult leaning on your parents during a hard time, there has to forward movement to achieve financial independence. You need a game plan. Ignore the urge to make excuses; this is your future we’re talking about. Here are some expert tips—for both parents and their adult children—to help navigate these tricky waters.
You love your kids. You want the best for them, and when you see them struggling, your first instinct is to run to them, check in hand, to help them get back on their feet. This may be helpful the first few times, but soon, your check becomes a relied-upon source of income. The best gift you can give your child is to push them out of the proverbial nest and encourage them to be self-sufficient adults. Here are three tips to help you along the way:
1. Impart knowledge.
For decades, you were responsible for feeding, sheltering and educating your child. But there’s one subject you may have missed—have you educated your kids about money? Maybe you did an allowance system, but money knowledge involves knowing how to budget, save and invest. If you don’t teach your kids these skills at home, expect your child to face a steep learning curve when they are on their own. Handing them a check isn’t a great solution, but education is.
2. Love them in other ways.
Parents of all income levels are guilty of over-indulging their kids with gifts, but there’s an alternative. If your kid expects a big check at every holiday, there is an unconscious reliance on the money. Labeling checks as ‘gifts’ doesn’t take away the fact that you’re handing over money. Learn to satisfy your gift-giving desires in other, less damaging ways. Think of it this way—do you want to burden your kids with caring for aging adults? No, of course not, but guess what. Your kids will be doing just that when you don’t have enough saved for retirement. Love your kids by prioritizing your own financial goals.
3. Say no.
Ah, this is a hard one. What do you do when your 29 year old son asks for help paying rent? You say no. What do you do when your 35 year old daughter asks for help buying clothes for her kids? You say no. It will be hard. You love your kids, but loaning them money isn’t the best way to love them. If they are struggling, be there. Your presence and emotional support are more valuable than money.
Being an adult comes with a lot of hard lessons, and money lessons are often the hardest to learn. Maybe your parents didn’t impart any financial wisdom on you, but you are your own person. Your choices are all your own. You will make mistakes, but as long as you keep trying, you’ll get better. Here are three tips to help you transition from dependent kid to independent adult:
1. Educate yourself.
As an adult, there is no parent to push and prod you to continue your studies, learning as an adult requires motivation from within. Another complication is how private your money is, meaning no one will know if the $60 you just spent was your last $60, or if you have $20,000 of credit card debt. This makes hiding one’s financial situation a common problem. Taking the time to research how to create a budget or confiding in a financial mentor is all up to you. You can ask your parents for guidance, but relying on them for a check isn’t going to solve your problems in the long-term.
2. Show them love.
You love your parents, right? Then don’t accept their money. It seems backwards, but here’s the thing—your parents need money too. They may seem invincible to you, but your parents have bills and financial needs, and they are facing the biggest due date of their lives: retirement. Don’t steal their future security by letting them compromise their own financial goals. The best gift you can give your parents is to rely on them for emotional support, and that’s it.
3. Say no.
Your rule of thumb should be to stop accepting financial assistance from your parents the day you graduate from school. Ask for advice; lean on them for emotional support, but say no to cash. It will be very difficult. But what you’ll gain through experience is a lifelong knowledge of how to handle tough financial situations. Bailouts are a band-aid. Want a great financial life? Fight through the hard times.
Parents and adult children play a significant role in each others’ lives. Don’t let money get in the way of your relationship. Take advantage of the emotional support family can offer, but don’t use them as a bank.
Peter Dunn, aka Pete the Planner, is an award-winning financial mind who has authored five books, hosts the popular Pete the Planner radio show and travels around the country offering financial education. His signature wit will have you laughing as you learn. For more from Peter, visit www.petetheplanner.com.