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Help Your Adult Children Become Financial Grown-Ups

Aug 04, 2017 3 min read Ilana Polyak


Dave Hamra should have known better. As a fee-only financial planner, he’s counseled many of his clients that they were doing their adult children a gross disservice by providing ongoing financial support. But when it came to his own family, Hamra found that cutting the financial apron strings wasn’t so easy.

After trying out a few majors, Hamra's son, now in his late 20s used up all the money that had been set aside for his education–before he could graduate. He spent six years in college but never did receive his diploma.

Later, during bouts of unemployment, he would often find his way back home, living with either his father or mother, Hamra’s ex-wife. They gave him money to tide him over until the next paycheck. If his car broke down, his parents often footed the bill. And they paid his cell phone bill, too.

Things came to a head a few years back when he was living in another state and working at a job he disliked and eventually quit. Hamra gave him one month to turn things around before he swooped in. But swoop in he did. Hamra flew out to help his son, packing up his apartment and bringing him home.

“I was really just being a parent, but I should have been sticking to my guns and having him make his own decisions. I had to get comfortable with that,” Hamra says.

Now Hamra's son is working at a natural foods store and living on his own. “It took a long time to get to this point,” Hamra says.

Though the situation never got so bad that it jeopardized Hamra’s own financial state, he’s seen it happen with his clients. And with one in six parents providing some financial assistance to their adult children, Opens in a new window according to Pew Research Center, it’s important to know how much help is too much.

Here are three ways to help you and your kids cut that cord.


Set expectations

No, it’s not your imagination. Today’s 20-somethings need more financial help than previous generations. They’re dealing with tough economics. For one, graduates are drowning in debt: Two-thirds finish college with student loans, Opens in a new window according to Pew, while 20 years ago, only half did. And the average debt load per graduate is $37,000 Opens in a new window, with an average loan repayment of $351 a month, according to 2016 analysis by student financial aid expert Mark Kantrowitz Opens in a new window.

Also, housing has grown more expensive. Fewer than 19% of rental listings in the top 25 markets are affordable for recent grads, according to property listing site Trulia Opens in a new window.  

“Those are extenuating circumstances that don’t have anything to do with the intelligence or go-get-it-ness of millennials,” says Elizabeth Fishel, co-author with Jeffrey Arnett of the book “Getting to 30: A Parents’ Guide for the 20-Something Years.”

Naturally, parents want to cut their kids some slack. But the help has to come with some expectations, both Fishel and Hamra say.

“I have one friend who has three children. She offered each of them a year at home, all expenses paid. After that, they had to move out, even if they didn’t have their dream job,” Fishel says.


Take care of yourself

Not every child follows a pre-determined path. Some may choose to pursue a field that’s worthwhile but not terribly lucrative. Others may be living in an area of the country that’s so expensive it takes an entire paycheck to make the rent.

It’s up to each parent to decide how far they are willing to go.

“If, at any point, parents start to feel that they have to deny themselves something that’s important to them, or they’re working longer than they wanted only because of what they’re doing for their kids, then I think it’s gone too far,” says Hamra.

Older workers may have fewer financial options. You may not be able to get another job or take on a side project to earn extra money.

“It’s no gift if parents overextend themselves and then need to come back to kids in 10 years and ask for help,” Fishel says.


Let them fail

At some point, the financial handouts must stop, both for parents’ and children’s sakes. While it may make parents uncomfortable to see their children fail, that’s what it might take for adult children to finally stand on their own two feet.

Hamra was bracing himself for that eventuality. “[We] never got to the point where [my son] was living out of his car,” he says, but Hamra wrestled with constant worries about how far he’d let his son fall.

“You must allow for failure. You must allow for some pain,” he says. “Remember, it’s sometimes one step back to take two steps forward.”


Bottom Line

Even the most conscientious child may need help from time to time. Entry-level jobs, student loan debt and high rents can make it difficult for recent grads to be financially independent right away. But when the help becomes chronic and prevents young adults from learning important money management skills, then it’s time to rethink the situation. Both you and your children will be better off for it.


Ilana Polyak is a freelance writer who specializes in personal finance and the financial advisory industry. Her work has appeared in The New York Times, Barron's, Kiplinger's Personal Finance, Bloomberg BusinessWeek and CNBC.com, where she is a frequent contributor.


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