We love our children. We want to support them and watch them grow into stable, happy adults. But sometimes adulthood gets stalled, financially. It’s a normal part of the foray into adulthood; high rent, low pay, high debt, low expendable cash. For your adult children, the trouble with starting out isn’t just learning to manage that paycheck, but to learn to live a little slimmer than maybe they had at home.
In some cases helping out is merited, after all, no one wants to leave their child to starve on the street. Still, shouldn’t you be using that money for your own living expenses, especially if you’ve already retired? Giving money to adult children could have an impact on the level of comfort in your lifestyle. It can also mean you have to work longer. Finding a happy medium is in order. Here are some ways to comfortably tow the line so both you and your adult child are taken care of.
Helping or Hurting
It might seem like giving money to your child money every month is helping them out, but it can actually be the opposite. Providing your child the tools to stand on their own two feet means actually letting them do it. For the rest of their lives, they’ll need to learn how to manage their money and make it last in thick and thin. If you’re paying for their foodie dinners, taxis, and high-end exercise class, you’re not helping them understand how to spend their money. In fact, you’re allowing them to live like children, instead of adults.
That said, some kids need a little extra money to make ends meet. Not all entry-level jobs pay a living wage, and it may be the child needs to wait it out a year or two to get a slight annual raise in order to pay for basic necessities. Or if they’re still students it’s difficult to work fulltime and go to class. They may need a little donation. In other cases, it could be a medical expense that requires more expenses than they’re equipped to cover, or there’s a one-time event, say a car repair, that they need some help with. Those things are okay, but you need to make sure it’s all within reason.
Budgets and Deadlines and Cut Off Plans
Your children have no real concept of your financial landscape unless you tell them about it. If helping a child is within your means for a very limited time, then you need to explain that to them, otherwise, they have no idea and will feel confused when you suddenly cut them off.
And, by the way, you should eventually cut them off. It’s hard, but you can do it, and they can make it. Sit down with your children and talk about how to spend a paycheck. Breakdown the expenses, and do some estimates to create a budget. If the dollars don’t quite stretch far enough, you can help, and they will understand how that money should be spent.
You should also set up an exit strategy with the child at the very beginning of financial giving. Set a timeframe, and sit down and go over expenses every quarter or so, just to see where they are. You’re allowed to do this as long as you’re paying, and if they don’t want your advice, then feel free to withhold money. It’s your money. Make sure they understand it’s a favor, and it’s not forever.
Share Wisdom, Stay Involved
It may be your child wants some advice. Great! Help them out! But only if they ask. Do treat them with respect and don’t berate them with financial advice that you think they should follow if they haven’t requested your thoughts. It’s time for them to manage what’s theirs, and you need to bite your tongue, tough as it may be. Just keep the lines of communication open, and be supportive of their concerns, rather than bossy.
That said, before they set off into the world, it’s not a bad idea to pay for a financial advising session, which go for about $200 an hour. This can get them thinking about things like 401(k) and investment plans for later on. It might also give them a little insight about where your own money is coming from, which may provide some incentive to get out on their own financial legs sooner.
Once you do set your adult child free, check in and see if they’re okay. It may be that they fall down a few times before they figure it out. Support, in this case, may come in the form of advice, not cash, but in the end, they’ll appreciate it because they’ve done it on their own, and you’ll feel better about your own money, too