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Millennials and Money: When Does a Parent’s Duty to Help Out End?
Updated: December 29, 2020 |
Taylor Kovar, CFP

Are Money Handouts to Adult Children Part of a Parent’s Responsibilities?

Have you ever had a misunderstanding with your adult child? About money? We hear that a call home from an adult child is about as frequent as a solar eclipse. Texting happens more often, maybe, but still. So when our friend, Brenda, saw her daughter’s name pop up on her phone she was thrilled.

It went like this:

Brenda: “Hey, Steph!”
Steph: “Hi, mom.”
Brenda: “How’s it going?”
Steph: “Not so great. Apparently you need to come sign this loan too.”

[Long pause]

Steph: “I’m at the car dealership and it’s taking forever, and NOW it turns out I need to wait for you to come sign the loan for my new car.”
Brenda: “New Car? What do you mean new car?”
Steph: “Mom! You know how gross my old car is. It’s nasty and the air conditioning doesn’t even work.“
Brenda: “… yes, but it’s paid for and summer’s almost over.”
Steph: “Seriously? Come on mom. Pleeease? It won’t take long. Just come meet me.”
Brenda: “How are you planning to pay for this car?”
Steph: “I interviewed for another awesome job last week. I’m sure I’ll get it. And I am not going to drive this hunk of junk to a new job!”

What would you do?

Block all future calls?

Drive your late model car down to the dealership to help?

Meet her for lunch to try and talk some sense into her?

Or think, here we go again?

Millennials and Money Growing Pains

Tension is inherent in relationships with adult children; money issues just bump it to the next level.

Part of the problem is that parental duties after the kids turn 18 aren’t usually clearly defined. Unspoken or unclear communication about money between parents and an adult child makes the situation even worse because we all hear what we want to hear.

“That was a loan? What? I’m your kid. I thought it was a gift.”

“I didn’t know there was a time limit on when I paid you back!”

Clarifying Expectations

To avoid this kind of problem, and the resulting damage to your relationship, you need to make a special effort to ensure clear communication. If you plan to assist your adult child with financial support, be sure to put it in writing – don’t call it a contract, call it a Letter of Understanding. (Tweet this!) Put the agreement in writing so both parties understand the expectations. It doesn’t have to be a formal contract, but a “Letter of Understanding” serves the same purpose and settles the relationship side of it.

Don’t feel squeamish about it. This piece of paper shows you value your relationship and you want to preserve it. It’s not that you don’t trust them, but you understand that time will pass and memories get foggy.

IF you decide to lend money to your adult child (money handouts really aren’t part of a parent’s responsibilities), try to honor his or her “adultness” with a real agreement so everyone is on the same page.

Should You Give Money to Your Adult Child?

Parenting is a lifelong commitment. The long days and nights when they are little. The rocky teen years. And the coaching, counseling, and care that continues even when “the nest” is empty. We all understand that these are important responsibilities for every parent? Should you also give money to your adult child, though?

Drawing up a written agreement can smooth over a lot of conflict, but the first question has to be whether any kind of money handout is justified.When they were little, they probably begged you to give them more candy than their little stomachs could handle. You refused because you knew this was in their best interest; maybe, today, you’ll actually be hurting instead of helping them if you give them financial assistance.

Most parents of post-college-aged kids will tell you, their “children” still have a lot to learn about life, “adulting”, and money management. Teaching them about money when they were young wasn’t always easy, and even if you gave it your best shot then, you may not see stellar results now. To some extent, you can only learn about personal finance by taking control of your own life, and this often means making a few hard mistakes.

Over the years we have addressed so many questions from parents of adult children. Should we give them money? Aren’t they just getting started with life? How much is too much? How long is too long? What should we do?

It’s difficult. (But when isn’t parenting a challenge?)

So is it right to give financial handouts to a son or daughter who is “on his or her own”? (True emergencies aside.)

Holding their hand for every step they attempted as a diaper-wearing youngster would have helped avoid a lot of falling, but they would never have learned to walk independently.

Is regularly funding a post-college “child” a bit of the same?

AgeWave in partnership with Merrill Lynch conducted a four-year, 50,000 participant survey to explore some patterns and facts about aging parents and their involvement with their kids. Among other stats, they found the average amount given to “adult children” by adults, who are themselves nearing retirement, is $6,800 annually.

So were we. Read more …

The important thing here is to realize that this is a serious conversation you have to have with yourself and your spouse. If you begin to feel that you have an obligation to be ready with a money handout whenever your adult children find themselves in a bind – or, worse, if they start to feel entitled to it – you may want to put on the brakes. Chances are that they can indeed find a way to take care of themselves.

How to Stop Paying Your Adult Child’s Bills – Use the S.T.O.P. Approach

It’s hard for parents to let go of their babies. We love them so much, and we just want to protect them and take care of them. Sending them out into the big world is scary. However, there comes a time when you have to let your kids stand on their own two feet.

At some point, it becomes a parent’s responsibility to let them make their own way, even if this means letting them make mistakes now and then. You can do it – you’ve had lots of practice! Remember when you sent them off to kindergarten? Or the first time you let them borrow the car? Or the day you dropped them off at college? You’ve raised a great kid that’s ready to take on the world, so why are you still paying their bills?? Here’s how you can stop paying your adult child’s bills.

We know LOTS of parents that are still footing the majority of their grown children’s bills. We’re talking rent, car payments, cell phones, clothes, even credit cards! If this sounds familiar, listen up – Mom and Dad, it’s time to cut the cord!

One of our jobs as parents is to raise our children to be financially responsible. That’s never going to happen if we’re paying all their bills! It’s time to STOP, and we’re going to teach you how. We’re sharing our 4-step approach that will get your kids off your payroll and on their way to adulting like champs!

Halting the money train is a big decision, so both parents need to be on board. Before you talk to your kids you need to sit down with your spouse, discuss which bills you expect your kids to take on, and when you expect them to start paying. You don’t have to cut them off all at once but set a reasonable time frame for each one. Maybe they’ll take over the cell phone when the contract is up or start paying their car payment in three months. Word to the wise, don’t wait too long on the credit card bill, or they might use it as an opportunity to rack up one heck of a balance while you’re still footing the bill! Once you and your spouse have a list of bills and cut-off dates, you’re ready to talk to your kids.

This isn’t a one-time discussion. It’s a big conversation, and your kids will need time to process it, think it over, and understand that you’re serious. The S.T.O.P. approach is a series of 4 weekly meetings with your kids where you can make your expectations clear, give them time to prepare for their new responsibilities, and build and strengthen your relationship with these newly-minted adults!

Meeting 1: Subject Them to the Idea

Tell your kids your thoughts and listen to theirs. This meeting is all about opening up the conversation and letting them know that change is coming without springing it on them and freaking them out!

Meeting 2: Tally Up the Totals

Let your kids know exactly what bills you’ve been covering and how much you’ve been paying. It gives them a clear picture of what they’ll be expected to pay. It gives them time to chew on it and plan for it before they actually start paying.

Meeting 3: Overemphasize the Dates

This is so important!! Have exact dates that you’re going to stop paying each bill and make it very clear to your kids. Go through those dates one by one so your kids have plenty of fair warning!

Meeting 4: Pump Them Up

This process might seem a little daunting to your kids, but you know they can do it! Mama didn’t raise no fools! Tell them that you believe in them, you’re proud of them and so impressed with the adults they are becoming. Use this meeting as an opportunity to build your relationship with your kids and encourage them as they take this next big step.

Stick with it. Remind yourself as often as necessary forcing your kids to make it on their own IS taking care of them. Yes, it will be tough, you will have to watch them go through some rough times – you’ll both be better for it. In just 4 weeks, you can cut the cord, launch those kids into adulthood, then sit back and enjoy your extra money!

Do you have questions about money situations with your adult child? We’d love to help. Oh and be sure to take our FREE scientific & confidential online Money Personality Assessment and find out both of your Money Personalities. Email us at [email protected] or ask us on Twitter or Facebook.

Taylor & Megan

The Money Couple


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