They need to become independent, and you need to have a stable retirement. Wean your children financially with love and respect.
If you’re the parent of young adults, you may be wondering if your kids are ever going to make it on their own.
It’s small comfort, but if you’re helping support grown kids, you’re in good company. Here’s what a May 2015 study by the Pew Research Center found:
- About 61 percent of American parents with adult children gave adult children financial support in the past year.
- Half of that assistance was for special circumstances, not for ongoing financial support.
- Among parents who were helping adult kids with recurring costs, education expenses were the biggest reason.
- Thirty percent of Americans ages 50 to 64 polled had an adult child living with them most of the year. That’s about normal and down from 36 percent in 2012, when the number hit its highest point in 40 years.
Younger workers wobbling
Although the recession is behind us, the recovery has been tepid and many young Americans still are struggling financially. Unemployment and underemployment, poor-quality jobs and low wages continue to make it hard for younger adults to get launched financially. “[S]even classes of students have graduated into an acutely weak labor market and have had to compete with more-experienced workers for a limited number of job opportunities,” says a study by the Economic Policy Institute.
Younger adults’ economic difficulties are a reflection of long-term economic trends. More jobs today require advanced skills. Fewer high-paying factory jobs are available for workers who have only a high school diploma, The Wall Street Journal writes.
Despite the undeniable economic difficulties, some observers say that this generation’s kids also are slower to grow up.
It’s hard for loving parents to know how to best express their support and when help really is in a child’s best interest. Despite the economic headwinds, they still must become independent. And by helping them financially, you may be subtly signaling that you don’t trust that they are capable of caring for themselves.
Also, helping your kids may endanger your own financial stability, especially if you have taken on debt or delayed your retirement to help them.
“This is of course an additional financial burden on the parents, and one they had not likely planned for,” says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. “What was intended to be a temporary situation often turns into a permanent one, potentially burdening the finances and the relationship.”
If your grown kids are depending too heavily on Mom and Dad, here’s guidance for cutting them off with love and respect, and helping them launch independent lives:
1. Set boundaries gently but firmly
Cut the cord gradually.
Begin with a conversation. Tell the kids how much you love them. Tell them that you believe in them and mean it. Of course they have failed sometimes. Most of us need to try — and try again — until we figure out how to get it right. Try to focus on the times when they got it right, on ways they’ve proved their capacity to succeed.
Tell them that you’ll be there for them as they take on more and more of their financial responsibilities. Ask them to help identify nonfinancial ways you can be supportive, and then commit to the ones you can, in the place of money.
2. Make a plan to end help, with dates
This is a big change and it could be tough on all of you. Tell the kids what they can and can’t expect from you. Make a road map for this journey, with goals and dates for achieving them.
If possible, include your kids in setting these goals and in discussing how to reach them. Involving them respects and supports their independence. It also may give you important information about what’s realistic for them to achieve and when.
Of course not all kids will be able to respect their parents’ need to pull back. Some won’t be willing to participate in this planning with you.
One way of defusing the difficulties may be to get help from someone who’s neutral, a nonprofit financial counselor. NFCC counseling is free or low-cost. Counselors can act as an independent third party to facilitate the transition to independence.
Find an NFCC counseling agency near you by calling 800-388-2227.
3. Help them create a budget
Teach adult kids the basics of finance if they don’t already have a good grasp. One practical way to do this is to create a budget together. Try not to make it overly complicated. (See: “6 Secrets to Easy Budgets.”)
You might use one of the free online budgeting sites like our partner PowerWallet. Or maybe the kids will go for a simple spreadsheet like Excel or Google docs’ free spreadsheet. Here’s a good rule of thumb for budgeting: Earmark 50 percent of income for needs, 30 percent for wants and put 20 percent in savings.
4. Pull back gradually
Don’t cut off your kids suddenly or in one drastic step. Take 12 to 24 months to help them get on their feet financially. Start by removing support for smaller expenses. For example, you could tell them that for the first six months, you’ll pay for their cellphone plan, but after that, it’s up to them.
Continue helping with student loans longest – for about 18 months — while your grown kids get used to assuming other responsibilities and get some success under their belts.
5. Lead by example
You may have kept family finances private from your kids in the past. Many Americans do. But some increased transparency can help the kids watch how you do it. Be sure you pay bills on time, work on your credit score and save whenever possible.
They’ll be watching your spending closely during this period. Make sure you model the frugality and careful habits that you want to see in them.
If you’re the parent of younger children, you have a chance to head off dependency in adulthood by encouraging financial independence now. Time Magazine has good ideas for how to do this. Or if you prefer, here’s a what-not-to-do article detailing six easy steps to make sure your kids grow up to be morons about money and personal finance.
Have you had to cut off financial support for your adult kids? Tell us what worked and what didn’t. Share with use in comments below or on our Facebook page.