Giving a hand to your adult children might be as small as covering their phone bill or as drastic as fronting them a house downpayment. As children transition into adulthood, parents often still want to support them, both emotionally and financially. And they can grow accustomed to the support - as many of us know, it can be hard to wean your adult children off of your bank account.

If you’re helping your kids transition into adulthood, you’re not alone. A 2018 Pew Research Center found that only 24 percent of young adults were financially independent by age 22 or younger, compared to 32 percent in 1980.¹ There are many causes for today's extended dependence, but, regardless of the reason, the solution isn't straightforward.

Parental "outpatient" support not only hinders a kid's ability to become fully self-sufficient, but also has another grave side-effect: your shrinking retirement savings. As the saying goes: "Don't set yourself on fire to keep other people warm." We all make sacrifices for our children throughout their lives, but handicapping your own retirement isn't the best way to help your kids, especially if they feel like they'll have to support you in the future.

So how can you bring an end to financially supporting your adult children? Ease the process with the four suggestions below.

Be Transparent in Your Communication

When first letting your children know that you will no longer pay their phone bill, help out with groceries, or give them a hefty Christmas wad, make sure to explain why. Remind them that this is not about your lack of care or love for them, but rather it is for their long-term benefit and ability to provide for themselves after you’re gone.

By treating your children as fellow adults, you can actually give them a sense of empowerment that independence brings.  

Give Your Children an Adequate Timeline 

If your kids are used to a monthly check, phone support, or even one-off amounts of money when in need, it can be a shock to immediately cut off the financial supply. Giving your children time to organize their finances and emotionally prepare to fully support themselves is one way to lead them towards successful financial independence. 

In addition, giving them a timeline creates an objective boundary that might be hard to set otherwise. If you wait until you think your kids can handle it, or until you feel “ready,” the time may never come. Choosing a date and sticking to it puts the decision in stone and makes it easier to follow through.

Provide the Tools to Succeed

Educating your adult children on best practices for managing their money can increase their confidence while giving them the means to budget, spend and save properly. You can give them advice on your own or point them towards a financial planner, which has various benefits. If it’s your own financial advisor, they can explain how your financial support can be detrimental to your retirement and well-being, which can give your kids more clarity on the situation.

Having an objective perspective can take the emotion out of the decision, making it more of a logical next step. A financial planner can also assist your kids in organizing their finances and give them a head-start on becoming financially literate. We're always happy to talk with our clients' children and give advice when necessary.

Prepare to Still Feel Responsible

As you put a stop to financially supporting your kids, you may still feel twinges of desire to help them out. The first step towards dealing with these emotions is to expect that they may come up, but prepare yourself to avoid reacting. Even if your adult child struggles trying to figure out how to afford certain expenses, it is ultimately this difficulty that can lead to growth. When faced with financial realities, it will likely motivate your children to prepare, save and budget more diligently. 

Putting an end to financially supporting your adult children isn’t easy, especially with regard to current financial hardships. With 54 percent of young adults dealing with educational debt, it can be emotionally difficult not to offer assistance if your kids are struggling.² However, by easing your adult children into independence and preparing them with the tools to effectively manage their money, you can smoothly move towards a healthier financial state for both you and your kids.

1. https://www.pewsocialtrends.org/2019/10/23/majority-of-americans-say-parents-are-doing-too-much-for-their-young-adult-children/
2. https://www.federalreserve.gov/publications/2019-economic-well-being-of-us-households-in-2018-student-loans-and-other-education-debt.htm

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