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Should You Really Be Helping Your Adult Children Financially?

03 Jun

By: Colleen Weber

Investment / News / News and Updates

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By Colleen Weber, CFP®, CPA

When the 2008/2009 financial crisis hit, many millennials were just entering the workforce or in the early years of their career. With high unemployment and overqualified people applying for jobs, the younger generation was hit hard and many young adults had to move home or make unexpected life changes. Well, it’s happening again, and millennials and the older half of Generation Z are hurting financially since many of them work in industries that have taken the brunt of the coronavirus shutdowns. (1)

That means your adult children may need help financially. And as a parent, you probably want to give them a helping hand in these uncertain times, just like the 74% of parents who were already helping their adult children financially before the global pandemic. (2) But this generosity can be dangerous if it starts eating away at your nest egg. Here are some practical ways to address this challenge and ensure that your financial future stays secure. 

1. Have A Heart-To-Heart

Unless you openly talk to your children about finances, they may not know they’re setting you back. Sit down and have a heart-to-heart with your kids to give them a peek into your financial situation. Explain how giving them money has pushed back your retirement date or forced you to dip into your 401(k). This will likely be a difficult conversation, but they’re adults…they can handle it! Be as specific as possible to help them better understand why you need to cut the cord. 

If your children are upset, phrase it in a way that benefits them. Let them know that your own financial security means they won’t have to support you during retirement. You’re doing this for them after all.   

2. Offer Support In Other Ways

Just because you don’t give your child financial support doesn’t mean you don’t support them at all. Ask how you can be there for them moving forward. Could you help them look for a job? Offer to help find housing within their new budget? Maybe walk them through how to negotiate a raise at their current job? There are many ways to help your child without handing over the checkbook. Make sure they know you’re still there for them. 

3. Help Them Create A Budget

The first rule of financial security is spending less than you earn and saving the difference. If your adult child can master this, they’ll soon be more independent. Teach them the 50/30/20 budgeting rule that states 50% of expenses should go to needs, 30% should go to wants, and 20% should go to savings. Introduce them to a budgeting app that can help them manage their money straight from their phone. 

4. Give Them Conditions

Don’t want to cut your kids off cold turkey? Give them conditions on how long and under what circumstances you’ll continue to support them. They’ll learn nothing if you hand over money without a thought. But if you introduce conditions, they’ll learn to be responsible.  

These conditions might include treating the money you give them as a loan. If they need money for rent, set clear rules on when they’ll pay you back (and even add interest if you want). 

If your child is jobless and wants to move back home, set a time limit to how long they’ll stay and how they’ll contribute to the household. The bottom line is to make them earn the money you give them.   

Keep Your Retirement On Track

Once you’ve had the heart-to-heart and have cut the money cord with your children, take a deep breath. You may doubt your choices as you see your child struggle to make ends meet, but take comfort in knowing this is only temporary. You’ll be there to emotionally support them every step of the way, just not financially.  

Teaching your child how to manage money is a wonderful gift. When they can set a steady course toward their own financial success, it helps them live within their means and helps you keep your retirement savings. 

Here at Colleen Weber CPA, CFP, we understand your challenges and worries, and we’re here to support you on your financial journey—and your children on theirs! We believe that it’s never too late to get your finances in order, so whether you want to check on your progress toward retirement or your child needs some help setting a strong foundation, we are here to help. Get started by booking a free introductory meeting online!

About Colleen

Colleen Weber is a fee-only financial advisor, CERTIFIED FINANCIAL PLANNER™ professional, and CPA with more than 15 years of financial planning experience. Providing comprehensive financial planning and wealth management, she specializes in serving clients nearing retirement, retirees, busy professionals, and women. She is passionate about developing financial plans that save clients on taxes, and investment strategies that help them pursue their goals. Learn more about Colleen by connecting with her on LinkedIn or booking a complimentary phone call meeting.


(1) https://www.businessinsider.com/millennials-gen-z-laid-off-furloughed-coronavirus-job-market-2020-4

(2) https://www.usatoday.com/story/money/personalfinance/budget-and-spending/2017/12/11/nearly-75-of-parents-help-their-adult-children-financially/108507432/