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. The Pew Research Center offered a look at that experience in a study published in May 2015:
- About 61 percent of American parents with adult children gave adult children financial support in the previous 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 percentage hit 36 percent in 2012 — the highest point in 40 years.)
Younger workers still challenged
With the Great Recession now in the rearview mirror, prospects for new high-school and college graduates have finally begun to brighten, according to the Economic Policy Institute. Unemployment rates for young high school and young college grads had returned to within 1 percentage point of the pre-recession rate in 2007, according to research by the nonprofit. Nonetheless, many young adults who graduated into a weak labor market for seven years are still playing catch-up:
Relative to the full employment economy of the late 1990s and 2000, the shares of young graduates who are unemployed and underemployed, and generally “idled” by the economy (neither working nor in school), are still quite high. And economic growth has not yet reached all corners of the labor market.
Younger adults’ economic difficulties are also 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.
Despite the economic headwinds, these young adults 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 of their financial responsibilities. Ask them to help identify non-financial ways you can be supportive, and then commit to the ones you can, in the place of money.
2. Make a plan to stop helping, 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 discuss 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. Help from the NFCC (National Federation for Credit Counseling) is free or low-cost. Counselors can act as an independent third party to facilitate the transition to independence.
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: “8 Secrets to Building a Budget That Works.“)
You might use one of the free online budgeting sites like Mint or PowerWallet. 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 the 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. Check out: “5 Lessons That Turn Kids Into Money-Savvy Adults.” Or, if you’ve missed that window, read: “11 Essential Money Lessons Every College Student Needs to Learn.” (For a regular diet of personal finance and information on smart living, urge your adult kids to sign up for our free newsletter.)
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.
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