It’s understandable to feel financially obligated to your kids when they need a little extra help, but you also want them to become financially independent. Monetary support can provide a short-term lifeline, but I have also seen this approach backfire.

1. Paying Their Bills Will Cost You.

Don’t feel selfish for focusing on your retirement savings. Every dollar you give away adds up. The more you give to your kids, the less you will have for retirement. This could put a huge financial burden on your kids if/when you run out of money in retirement.

In addition, there can also be an emotional cost. Money can strain any relationship, especially with family. Your adult kids might feel guilty and inadequate when they ask for help. As time goes on, you may begin to feel taken advantage of or underappreciated.

The truth is, supporting your kids financially could be doing more damage than good.

2. Set Them Up for Success.

It’s never too late to teach your kids good money management.

Start with an open conversation. Explain that it’s time for them to take on more financial responsibility and it’s time for you to plan for retirement.

Next, help them establish a budget and brainstorms ideas to cut their expenses and keep costs low. Come up with a plan to ween them off of your household payroll in the coming months.

Once they’re on their feet, talk about managing debt, planning for taxes, and investing their savings.

3. Find Other Ways to Be Supportive.

You have so much more to offer than money.

Financial difficulties can be emotionally taxing. Sometimes all our kids need is a listening ear, a shoulder to lean on, and some encouragement from us.

There are so many ways to support your kids that don’t require a cash handout. Maybe you have an old car you aren’t using, you could pitch in with babysitting, or help them find the best deals when they need to make a large purchase.

Be proud of what you’ve accomplished. Raising kids is no easy feat. You’ve done well, and you can still do better, starting today!

It’s not too late to help your adult kids grow into financially independent and thriving adults.

Let’s Get Started

The post Helping Your (Adult) Kids Become Financially Independent appeared first on AWM.

Unfortunately, most of your neighbors do not understand this critical concept. Industry website creditcards.com reports that 3 in 4 parents still subsidize the spending of their adult children.[1]

You should not take comfort from repeating the mistakes of the crowd.

When you give your adult children free handouts, you might actually be harming them. Here’s how: 

1. 1. You reinforce irresponsible behavior. When your children’s spending exceeds income, that’s bad behavior. We all need to learn to live within what we earn (unless you want to go deep into debt like many of your neighbors).[2]  Do not subsidize their excess spending.
   2. You transfer this misbehavior to your grandchildren. Imagine if your children passed these destructive habits to your grandchildren! According to the Center for Retirement Research at Boston College, this is precisely what can happen.[3]  Spoiling grandchildren now can tarnish your legacy of the values they live out later.
   3. You ruin your children’s budgets. The reality is that most parents consider gifts to children as one-time in nature. However, many adult children might forget that fact. Their spending adjusts to permanent levels, despite the fact that your gifting is not permanent.
   4. You deprive your children of joy. Adult children who truly love their parents desire for their parents to be happy. While money cannot buy you happiness, being poor does appear to go along with emotional problems, according to debt.org.[4]
   5. You might endanger the future financial well-being of your children. Adult children often fail to consider one very important risk: the risk that they themselves might have to support their parents in their old age.  This risk rises when their parents’ health grows worse. Parents can serve their children best by taking care of themselves first through responsibly enjoying their wealth for their own benefit. They might lessen the risk of children having to support their parents financially later on. Wise parents who successfully raised their adult children to be independent should take pride in that success. Such parents often enjoy better health.

Healthy parents ought to make their children happier, too.

Parents ought to live out the purpose for their lives first. Prudent financial planning can empower you to do this, perhaps with some room (on occasion) to spoil grandchildren.

We would be pleased to help you empower your family to live with purpose.

Schedule appointment

[1] Brady Porche, “Poll: 3 in 4 parents with adult kids help them pay debts, living expenses” on https://www.creditcards.com/credit-card-news/pay-adult-childrens-debt-poll.php  accessed on June 13, 2018.
[2] Tae Kim, “Total US household debt soars to record about $13 trillion” on https://www.cnbc.com/2018/02/13/total-us-household-debt-soars-to-record-above-13-trillion.html  accessed on June 13, 2018.
[3] “Parents Pass (Bad) Money Habits to Kids”, Center for Retirement Research at Boston College on http://squaredawayblog.bc.edu/squared-away/parents-pass-bad-money-habits-to-kids/  accessed on June 13, 2018.
[4] https://www.debt.org/advice/emotional-effects/  accessed on June 13, 2018.

The post 5 Ways You Can Ruin the Financial Future of Your Adult Children appeared first on AWM.