By Shawndi Purselley, CFP®, CDFA®, Owner and Co-Founder, Wealth Advisor
How to finally stop financially supporting your adult children. Cutting the cord can be difficult, but if you don’t you could be risking your own financial security and that’s not okay.
My grandparents financially supported my mother well into her 40s. She was able to stay at their home whenever and for however long needed. During the times she lived under their roof, they supplied all her food, clothing, vehicle, gas and provided support for any medical needs. They also continually gave her money even when she was not living under their roof. My mother would work sporadically from time-to-time, but that money never made it into the hands of my grandparents as a payback for the money they so generously provided to her.
My grandparents enabled my mom to become and remain financially dependent. They were never able to say no and it had a financially devastating impact on their last several years. The stress of their financial situation was very apparent and they struggled to make ends meet. They did not have retirement savings; they were in credit card debt and had a reverse mortgage on our family home. I also believe it financially and emotionally crippled my mother as she never had a desire to earn a living for herself. When my grandparents passed away, it had a huge impact on my mother as her main source of income was gone. And since she had no real-world experience on caring for herself, she struggled to survive. I know initially their desire to help came from a place of love and compassion for us both and a true desire to help give my mom and me a fighting chance. But in the long run, this only hurt my mother’s desire and ability to fend for herself.
In my opinion, parents may provide financial support due to an unhealthy ability to “let go” of their children. Some parents may struggle with the ability to put healthy financial boundaries in place. I have parents talk to me in my financial planning practice about the strong feeling of guilt they feel in telling their children no more, and finding a way to appropriately discontinue support. I often see that when parents have a savings nest egg, they feel it is selfish to not provide for children when asked to help. I assure you, that NO is not a selfish response. If you are in a financial position to help your children, I suggest you have a very healthy conversation about the rules surrounding your help. For example, is this a gift or a loan, what it is to be used for and what is the amount of the financial need. In addition, be sure they understand if this is a one-time offer or if there is an expectation of continued support. Setting up the game plan ahead of time with expectations will ensure your children are not blind-sided by your future actions. Sometimes just communicating on the front-end can save a lot of family drama on the back-end.
If you are sacrificing your retirement and personal financial fitness by helping your children, you need to develop a strategy and a goal for realistically reducing over a period of time the amount of support you are providing to them. Be sure you have a detailed and open discussion with them and share your plan going forward with the specifics for how you plan on discontinuing the support. I do not believe a “cold turkey” approach is viable and I don’t advise this type of strategy. Unless of course, your current financial situation demands that you stop helping immediately. I do think that sharing your plan with your child is crucial to its success. The length of time for this exit strategy will need to depend on the amount of support you are providing to them. In other words, the larger the contribution or financial support, the longer the time they may need to become more financially secure on their own. This may take a while for them to process as they will feel like you may be abandoning them. Be sure to remind your child that you love them and that this is not meant to be a punishment. I believe it is ok to remind them that you have been generous to this point and provided a reasonable amount of time for them to become financially independent. I also believe it is important to tell them that you now need to focus on your own financial security for the future.
After all, do they want to turn the tables in a few years and begin to start financially supporting you!? My oldest daughter (27 years old) likes to harass me, and when we are bantering back and forth in disagreement she will say “fine mom, then I am not taking care of you when you are old!” I tell her “thank goodness! I have been saving for a long time to ensure that indeed, you are NOT the one caring for me!” My youngest son (10 years old) always tells me that he will take care of me and plans on building me a home in his backyard someday. Of course we are all just playing around with each other, but the fact of the matter is, I DO NOT want my children taking care of me. Especially if it is due to the fact that I sabotaged my financial security by continually giving them money that I could have put to work for my future.
When my oldest graduated from college, I sat down with her over brunch one Sunday afternoon and had to explain the hard decision I had made to stop my financial support. She shed a few tears, mainly because she was nervous to be all on her own. But I assured her this is what she “trained” for and she was ready. She was gainfully employed and so we slowly weaned her off of support over the next 6 months, but it worked and she has been financial independent ever since. Of course as parents we can always be there for emergencies if we are able, but I do not support her and to-date she hasn’t even asked for emergency funding yet.
If you are struggling with this issue, please reach out to us. We are happy to be included on a family meeting and/or family plan in order to bring some clarity to the situation. We can help build a non-biased game plan so that you and your child can move forward in a healthy and thought out game plan.