Your Adult Child and Money Management
Most parents want what’s best for their children, no matter their age. But once kids reach adulthood, many wonder what their role should be when it comes to money management. While you may feel obligated to give your adult children money when they need it, you also want them to become financially independent for their own good.
Millennials and Generation Z are more likely to be saddled with student loan debt, a higher cost of living, comparably lower salaries, and less job security than their parents and grandparents. It’s become increasingly common for parents to continue offering support, but a short-term lifeline can backfire over time.
As a parent, you’re accustomed to putting your child’s needs ahead of your own. But whether you are paying a cell phone bill, covering rent, or keeping them as authorized users on your credit card, it may be time to reconsider.
Focusing on your own long-term needs is not selfish. Without adequately preparing for retirement, you could end up placing a financial burden on your children in your later years. No matter how capable you feel as a provider now, you can’t work forever, and at some point, your wage-earning career will come to an end.
In addition to the financial costs, also consider the emotional costs of subsidizing your adult children’s finances. Money always has the potential to strain family relationships, and you may begin to feel underappreciated. Being dependent on you may cause your children to feel guilty or as if they are failing. The money could be doing more damage than good.
One of the reasons parents continue to support their adult kids financially is because they feel like they’ve failed them. Perhaps some money management principles were missed along the way, but chances are you did the best you could with what you knew and the resources and time that were available to you. It’s not too late to set them up now for success.
You can continue to be supportive without enabling bad financial decisions. Rather than cut them off abruptly, ween them off your household payroll while teaching them how to manage their own money and bills on the road to financial independence.
John A. Frisch, CPA/PFS, CFP®, AIF®, PPC™ founded Alliant Wealth Advisors in 1995 and has over 30 years of experience as a financial professional. In his free time, he’s an avid long-distance runner, a sport that requires discipline, patience, and vision. John applies these same skills to his professional pursuits: He helps families and retirement plan sponsors adopt a patient, disciplined approach to overcoming financial challenges and reaching their distant goals along a clear path. Learn more at www.alliantwealth.com.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This material was prepared by Crystal Marketing Solutions, LLC, and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate and is intended merely for educational purposes, not as advice.