Kicking the kids off the family dole
as published in the Racine Journal Times | September, 2017
As a father of two young children, there’s a constant outflow of money in our household, which is fine because that’s one of the responsibilities of being a parent. The question is when should this financial support end?
For many families, there used to be an implicit understanding that when a child graduated from high school or college, they would be financially independent and support themselves. This is not necessarily the case anymore, which leads to a number of potential issues.
From the parents’ perspective, continuing to support an adult child competes with the parents’ ability to meet their own financial goals. Instead of saving for their own financial independence, parents are prolonging their children’s dependence on them.
This dependence inevitably leads to conflict when the parents’ needs outweigh their children’s, and they’re forced to stop the financial support. From the child’s perspective, as an adult their desire to be independent is compromised when they still need to ask mom or dad for money leading to strains on their relationship.
The type of financial support to adult children ranges from paying insurance premiums to payments for monthly living expenses such as groceries or rent payments. Depending on the child’s profession or location, this help may be unavoidable initially but to expect this support to last indefinitely is what typically leads to the greatest problems.
Unfortunately, there is not a textbook answer to determining when an adult child should be financially self-sufficient. Rather than arbitrarily recommending a specific age, it’s more important to identify whether this is an issue in your family and to initiate a conversation around expectations from both the parents’ and child’s perspective. Since every family is different, the key to success in navigating this delicate transition is to agree on a mutual goal (financial self-sufficiency for the child?), outline the steps to achieve this and identify a timeline for achieving the goal.
Some of the steps I’ve seen with other families is to gradually reduce the parents’ support each year with a corresponding increase in the child’s responsibilities. Other families have used the child’s employment status as the trigger for changes. As the child’s income increases, they take on more responsibilities. The challenge with this approach is what happens if the child’s income is insufficient to maintain their lifestyle? The reality is that if there isn’t a reasonable belief the child’s income will increase, they’re going to need to adjust their lifestyle to match their financial realities. Starting the conversation well in advance of the anticipated date allows everyone the chance to adapt and prepare.
If you’re looking for suggestions on ways to prepare your children for financial self-sufficiency, I highly recommend Ron Lieber’s book “The Opposite of Spoiled: Raising Kids Who are Grounded, Generous, and Smart About Money.”