Is Your Support Crippling Your Child’s Future?

Are you helping your children too much? Do you expect them to repay the favor if you run out of money from helping them all these years? And I mean, will they take you in, pay for your health care, and maybe change a diaper or 2? Don’t get any ideas mom and dad, already have your spots reserved at the nursing home. Ok, I’m just kidding, I will always be there to help them out as much as I can.

But, let’s take a look at how much help we can give our children without hurting their own futures and without debilitating our goals too. You see if you always give, give, and give, then we might run out of things to give. Then you yourself are screwed because you ran out of money, and the person you were helping likely never learned how to support themselves on their own. In reality, then you are hurting both you and your children even though you were only trying to help. In order to give and continue to give (this is key), we need to make sure our finances are in order first.

Let me tell you about one woman, we will call her Sally, and her struggle with helping her children. Her kids were in middle school, and of course they always wanted to newest and best sneakers, phones, video games, etc. well you get the idea. They needed to keep up with what their friends had! And she wanted to be a good mom, and buy all those things for them. Problem was, Sally was going into debt each month to purchase her kids all these unnecessary items. (Well they might call them a must have.) She was overspending by about $2,000 each month, and piling up her credit card debt to new highs! 

She grew up the same way, where her parents always gave her anything she wanted. Since this was how she was raised, she didn’t really know any different and continued the pattern. Luckily I showed her how to track her money better and explained how she can continue down this road or make a change not only for her life but for her children’s lives as well. If she continued overspending, what would she be showing her children? They would learn exactly what she learned as a kid, how to spend freely and they would end up in the very situation she was in.

So while Sally thought she was doing the right thing for her kids by giving them whatever they wanted, she was just continuing a bad money habit pattern. She was able to make a change not only for her life, but for her children’s lives as well, which is more important in the end. What a great role model she has become for her kids, for her parents, and for herself.

Before you spend on your kids, whether young, teenage, or adult, here are a few things to consider courtesy of AARP:

The AARP suggested answering four questions, using a scale of 0 to 5, may help parents determine whether to give money to an adult child. The questions are:7
1.      Will this investment add stability and security to my child’s life?
(0 = entirely optional; 5 = absolutely necessary)
2.      Is this a short-term or one-time cash need, or is it something that could go on for years?
(0 = guaranteed, long-term payouts; 5 = absolutely just one time)
3.      Is there risk in the investment beyond the cash outlay, such as financial liability on a contract or damage to your credit?
(0 = very high levels of risk; 5 = no additional risks)
4.      Can you lend or give this money without fear of damaging your relationship with your child? Or, will it cause tensions or resentments for the people involved?
(0 = guaranteed tensions or resentments; 5 = everyone is happy)
If the combined answers total 13 or higher according to AARP, the answer is yes, give money to your adult child. If the total is less than 13, you may want to think twice before opening your wallet.7
Now will you do me a favor? Please remind me to read this post when my daughter is old enough to start begging for things!

Happy Saying NO to your kids!

Jessica Weaver, CFP®, CDFA™, CFS®
Wealth Advisor