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Financial support for adult children

Why are more adult children getting financial support from their parents?

Most parents with children between 18 and 35 (96%) say they have financially supported their adult children. Almost half (48%) say they continue to support their children’s lives when they are between 30 and 35.

While many of these parents (88%) want to provide this support, a third (36%) worry about the impact on their retirement savings. A third (33%) worry it may completely delay their retirement plans.

You can’t help them if you get into trouble.

There is no way for you to help them if you put yourself into a tough financial situation. That’s why the most important thing to do is get a clear picture of your finances and how much you can truly afford to help them.

Once you’re clear for yourself, the next most important thing is to share that information with your children. Setting expectations right from the start is the best way to steer clear of issues down the road.

What to consider about your own finances

If you are an older parent who wishes to financially support a grown child, you need to assess your finances and determine how much you can afford to give. Do not put yourself in a situation where you cannot cover your expenses. 

Things to consider:

  • What is your gross income per calendar year?
  • What is your household income?
  • How many family members do you support?
  • Are you keeping up with saving for retirement?
  • Do you have an emergency fund set aside?
  • How will the end of your tax year look? Will you owe income tax, or will you get a tax return?
  • Are your financial assets paid for, or do you have payments to make?

Even though it might be tempting to use up some of your savings, you should be careful not to use too much of it, especially if you’re saving for retirement. If that happens, the tide may turn and your children may end up financially supporting you.

Are you helping the child or hindering them?

Parents are giving their grown children more money than ever before. It is difficult for parents to watch their children struggle financially.

Whether it’s by letting them stay home, paying for their cell phone, or even paying off their student loans. Many young adults face challenges because of high student loan debt, low income, and high housing costs.

A lot of parents plan to provide income assistance until their kids are in a better position. Know your position and your child’s when deciding whether to provide financial support. You need to know if this is a short-term arrangement or something longer.

Your child’s independence and self-sufficiency might get off to a good start with the help of your financial support. It may also hurt their self-sufficiency by stopping them from learning essential life lessons.

If you constantly assist your adult children financially, you may be harming their development. When it comes to the process of managing their finances, they may not act responsibly if you always bail them out. Though you have good intentions, you may be delaying their path to becoming a financially independent person if you offer too much help.

Coming up with a plan

It is essential you create a clearly defined plan. Here are a few tips on how to create a successful plan.

Everything needs to be clearly laid out

Create a written agreement that clearly states how much and how long to expect to support them. Including how and when regular check-ins on how things are going is a good idea as well. Then, have everyone sign. You can easily refer to the document when needed.

Explain how you can help

Establish clear boundaries, with time and amount limits, and explain why they are there. Have an open and honest conversation with them about your situation and their need for support. You will be able to comprehend how much help you can provide and the appropriate forms of help.

Expectations are clear

Not just with money but also with what they will do to get back on their feet. If your child needs help, explain exactly what the funds are for and if it will be for a single occasion. They may get a false impression that the help will continue if they do not understand the expectations.

It’s important for parents and adult children who depend on money to have a serious conversation about how long and how much support they need. If there is an expectation for you to continue supporting them, you defeat the purpose of allowing them to mature and achieve financial independence.

Other ways you can help them

There are plenty of ways to help that don’t include you handing over money. You could:

  • Keep them under your insurance
  • Keep them on your cellphone plan
  • Job search for them or other research (such as, finding financial assistance from other places)
  • Help put together a financial plan
  • Help them with transportation
  • Let them live under your roof instead of paying their rent

Tips for success

Here are a few tried and true tips to help you move forward.

  • Set up incentives. if they save so much, you will match could be an example.
  • Provide appropriate emotional support. Steer away from going into child-parenting mode. Asking your parents for help is humbling.
  • Enjoy family time together.
  • Make sure to talk about things other than money. Go have some fun.
  • Communicate regularly about how things are going.
  • Prepare for walking away and emotional fallout.
  • Watch for signs of financial abuse.
  • Make sure they don’t become completely dependent on you. Help them with financial planning, and set them up to make better financial decisions. 

Conclusion

No parent wants to witness their child facing financial difficulties. If you want to help, it is best to carefully plan and ensure your support is sustainable.

Find a balance between being aware of how things are going, but not controlling how things are going. Approaching things this way gives you the chance to see that they are being responsible, but also step in if need be. It is one thing to help a child who is struggling and doing their best. It’s another thing to create feelings of entitlement.

Find yourself in financial trouble because of helping an adult child? We can help you form a plan to get out of debt and stay out. Contact one of our trained counsellors today.

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