Finances are tricky. We all have our own personal views on what it takes to run our finances successfully. When someone else falls on hard times, we go about supporting them in different ways.
When it's kids that are the ones that are asking for extra support, it can be very hard to say no. After all, we generally want the best for our kids. We don't want them to fail because that would actually reflect badly on us. Failure isn't an option in our eyes for our kids because we don't want them to feel the pain of having to go through a trial. I would say that you can't protect them from everything though.
They are going to have some hard decisions to make in their life. They won't always be pleasant. The best thing that you can do is be there as much as possible to coach them along.
Give Intentionally In A Way That Fosters Their Independence
Helping your children out is not a bad thing. However, if you go about it the wrong way, you can make it so that you are actually enabling their problems instead of helping them to solve them. Finding ways to help them while fostering their independence is crucial.
Sometimes this can be in the form of startup costs like buying a house, going to college, starting a business. When you do these things and they are well intentioned, you will help give them the extra leg up to move forward on their journey to financial independence.
Other types included in an article by Dan Kadlec of Time Money says "Similar types of financial support include anything you might call a startup cost—a security deposit, a new wardrobe for work, furniture, a reliable (not necessarily new) car, a finite amount of small-business seed money, or picking up the cost of relocating for a job—in other words, payments that will help your children help themselves."
I would have to agree that when you give in a limited and finite way to help your kids get started, it can be a great way to help jump start their future and encourage them to move forward.
Other ways that help foster their independence and don't encourage enabling come from this Family Life article:
- Education - send them to a class that they can learn and pay for it.
- Groceries - Give them groceries or buy them a grocery card to help them out.
- Utility Bills - Pay the utility bill directly. This ensures that the money actually goes toward the bill.
- Medical bills - help advocate for your child if bills are piling up. Helping them negotiate better terms of repayment can really help out in more ways than one.
- Practical help - give of your time versus your money. Help out with projects at their home, spend quality time with them. Babysit for them so they can work their plan more.
So, the next time that you are asked by your kids for money, think about how it will affect them and how it's going to be used to help advance their future.
Set Clear Parameters On What You're Gifting
Sometimes we just like to throw money at a problem and hope that it goes away. We give charitably without doing the due diligence of how that money is being spent or where the money is even going. We believe that our children have things under control and that if we manage to buffer the problem long enough, it will sort itself out.
I would caution you against this. Know what you are paying for when you are helping children out. Don't give money blindly. Set expectations. Have them show you how the money will allow them to make their monthly budget work. Will it be a set time frame or will it be ongoing?
Focus on paying for needs instead of wants. If they want that newest model phone or clothing fashion, make them pay for it. Money you give them should be used for basic necessities like food, shelter, reliable transportation and things like that. By letting them work to increase their own lifestyle, they are realizing that it doesn't come free.
Don't Be Afraid To Provide Tough Love If Needed
We all have financial stress at one time or another. We all go through hard times. It's through these trials that we are able to mature and grow the most. Allowing your children to problem solve on their own and get creative to create their own solution can allow them to mature and grow up.
It's not a bad thing to step in and reinforce good hard working behavior from time to time. It's when it's given on an ongoing basis without them having to grow from it that is the problem.
Don't be afraid to let them fail from time to time. Failure builds character, resourcefulness and guile.
Require Something In Return For Your Financial Support
If you have adult children that still live at home, charge them rent. Don't let them get the impression that they can get something for nothing. The world will not let them get away with this, why should you? By giving them the safety net of your home, you are giving them the fallback to secure them if needed. You don't have to make it easy on them though. You could even just set aside this rent money and give it back in the form of a savings account when they do move out.
Take a skill that they have and have them put it to use for you. I can't tell you how many times I've helped with tech stuff in my family's lives. I've been able to save hundreds, if not thousands, of dollars in support techs coming out by helping to fix stuff that goes wacky from time to time. Find your child's skill and allow them to hone it by working for you using it from time to time to give back.
Give According To Your Own Means, Not What's Being Demanded
Their is always more that we can do for our kids. Don't feel guilty if you can't do everything for them. Actually, it's probably a great thing that you can't do everything you want to for them.
Don't give if it's going to hurt your retirement. Instead, give out of overflow as you can. Aim to bless them with your gifts. If you are giving them so much that your retirement is going to suffer, how are you helping them? Remember, the younger they are, the more options they have for earning. However, as retirement looms closer, your options are being limited.
A great way to get over this burden is to run your numbers and see where you will end up at when you get to retirement. If you are not where you need to be, maybe you need to rethink your strategy. Retirement is going to come one way or another, whether you like it or not.
Have A Clear Exit Strategy To End Financial Dependence
Do your kids know the impact on your finances that they are creating? Do you? Be honest about it and let them know why it must come to an end.
Create a concrete plan to end your aid. Set up a time table on how you will be ending the aid by tapering off the giving over time or all at once and be clear about it. And stick to it!
After ending aid, it can be a tough time for the dependent. Stay on as their financial coach to help them get through this. Teach them valuable lessons that will allow them to navigate through. Continue to have meaningful conversations about debt, savings, giving, budgeting and other financial situations that come up. They still need you!
"Your continued support of your adult children will ruin your financial life, and it will ruin their financial life. There are no winners. You believe you are sacrificing for another, but you aren’t. You are the captain of a sinking ship." says Peter Dunn from USA Today.
Being supportive in your child's life is all about finding teachable moments to help guide them to make great decisions when you are not there. If you are always swooping in to rescue them, they will never have a chance to leave the nest and spread their wings. They will end up learning the lessons the hard way when you are gone.
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