How Money Issues Affect Parent-Child Relationships

Regardless of your age, “money and parents” is a topic you can’t escape. Either you’re a parent with a millennial living at home, kiddo worried about helping mom and dad retire, or a parent paying your adult kids’ bills while they’re “on their own.” None of these scenarios are ideal. In all-of-the-above ways, your parent-child relationship is inescapably affected by money.

Almost every generation is dealing with the often-sticky situations involving parents and money (whether you’re the parent or the child). And it doesn’t always go well. The potential for conflict, tensions, blaming, and shaming tends to show up in relationships when dollars and cents start getting tossed around.  

How do you respect and even improve your relationships when dealing with money? We have a few ideas for each age group. But all focus on the importance of communication and mutual understanding.

1. Millennials living at home:

The number of American young adults living with their parents is the highest in 75 years. Not that long ago in 2005, 36 states reported the majority of young people living independently, while ten SHORT years later, in 2015 they cited only 6 states with that same statistic.

To the millennials still at home with mom and dad, our advice is- get out! Well, that sounds harsh, but stop relying on your parents to provide for you. Protect your parent-child relationship.

One first step you can make today is to start paying for your own cell phone. Be proactive. Don’t wait for your parents to cut you off. Step up and offer to start funding something important to you.

Living at home? Pay rent. If your parents have a guest house or a spare room that you’re staying in, you should pay the rent, as you would staying with someone other than your parents.

We understand how hard it is to live on your own, to do some of those things you’re afraid of, and life is expensive. BUT to live on your own is an important step in your personal growth. And one of the events that can boost your self-esteem immeasurably.

What expenses can you curb to start saving? Do you need to look for an additional job? A different one? Who can you call to share rent in an apartment? How can you fund your own life?

You’ll feel so much better being out on your own, even if you can’t afford a nice house just yet, that’s fine. 

Parents of Millennials

And parents with millennials in their basements, guide them, showing them that it’s important to start participating in how the house is run. Ask them to participate financially in the family, assigning them a portion of some bills and getting them involved in the expenses of the household. Calculate a fair rent for them to pay you.

Next, set a date. Encourage them to be out of the house in a set time. 3-6 months is more than reasonable for them to look at apartments, start finding roommates, transfer some bills into their names, and maybe even find a better job (or a side gig).

If you have young kiddos, talk to them now about future realities. Start preparing them to know what the future is going to be like! Give them a heads-up on how they’re expected to live life at college, and after college. It doesn’t have to be a sit-down, negative discussion, just start the conversation, keeping it positive and about your confidence in their growth.

Plant the seeds – the younger the better.

2. Millennials and Gen X-ers funding Mom and Dad’s retirement:

It’s becoming more and more common in today’s society. Some baby boomers don’t see retirement coming until it’s too late. In that scenario, Gen X-ers and millennials often find themselves scrambling in a role reversal to assist mom and dad.

For the first time in American history, economists predict that young people will be worse off than previous generations, and that has a lot to do with the fact that on top of their own unique financial and socio-economic struggles, they’ll be on the hook for all their parents’ debt, too.

Make sure you establish open communication. If you have siblings, discuss this together. And make sure mom and dad are included in the discussion too.

On the flip side, ensure that you won’t be a parent going to your kid in 30 years, needing help with retirement.

On either side of the issue, it’s vital to grasp what’s real and what isn’t, like our friend’s mom who was convinced she didn’t qualify for help from the state, and then when she went down to the office, she found she did.

Even if your parents did a fantastic job saving for retirement and there are no money issues to discuss, still talk to them about other aspects of retiring. From long-term care to lists of assets, it’s important to know your parent’s thoughts and values in their retirement.

Even though discussions like that might feel awkward, they’re necessary. If you are upfront and honest with your parents, they’ll be more likely to discuss these tender topics with you. The difficult reality is that we are all aging. It’s better to have these conversations sooner than later.

You’re coming from a positive place. So, ensure that the conversation stays light and optimistic. Often, most older people don’t like the word retirement, so feel free to use different terminology, such as “next step”.

Additionally, if you know your parents’ Money Personalities, that helps you understand them better and guide your discussion.

3. Parents (and grandparents) supporting kids (and grandkids):

Stop. Don’t do it! Put that wallet back where it came from. 

Don’t give your grown kids money, even if it’s just $500 to “help them out”. Even if you think it’ll just be one time because it won’t be.

Don’t pay your kid’s bills, but help guide them into adulthood, by showing them how to pay for their own lives. Do it kindly, with a little push, but help them into this next step.

You didn’t learn how to ride a bike for them. You explained the process, encouraged them, maybe even ran alongside, you picked them up when they fell, and then you reminded them that if they keep trying the payoff will be the exciting freedom of charting your own course. This is no different.

Work together and work it out.

Taylor & Megan Kovar

The Money Couple

Visit our Kids Korner for more information on raising smart money kids!