What We Should Consider BEFORE Giving Our Adult Children Money

How can we decide how much money to give away to our adult child(ren) if we don’t know how much we as parents are going to need? The 2013 Pew Report found 50% of middle-aged parents said they are their adult child’s primary means of support. In the same report, more than 30% of the parents said they provided support for adult children for reasons other than education. First, let’s define “adult child”. A century ago, children generally went to fulltime work at age 13. As schooling extended through teen years and early 20’s, adulthood has been pushed further out. The fact that the Affordable Care Act requires employers to cover employee’s children’s health care insurance to age 26 reflects the reality of adulthood and family life today.

Chances are if you are reading this, you are probably in one of the above categories. Some reasons cited for providing support to adult children include: taking longer to finish their education, their pursuit of personal ambitions before settling into a job or career, the weak economy and soaring student loans. These reasons include macro-economic conditions somewhat beyond the control of the individual and are spread across individual decisions made by and somewhat under the control of the individual adult child. There is a difference in helping a child launch their career and supporting a lifestyle above an adult child’s own means. But, whatever the reasons, a majority of middle-aged parents are paying more and paying longer.

If you are in that majority, or think you may join that group, here are some factors that need to considered:

1) This is not negotiable – Middle-aged parents, we MUST know our own financial preparation for emergencies and retirement before we are able to determine how much we can give to our adult children.
2) We must know what we are paying for. Are we paying for essentials like tuition and healthcare insurance or are we paying for “wants”, like a gym membership, high tech toys and pleasure travel?
3) Are we helping out with expenses for grandchildren or are we helping support an inflated lifestyle beyond the adult children’s means?
4) Moms, whether a member of a couple or single, must know our financial preparation for the future since we have a longer life expectancy and greater healthcare costs.

It’s difficult to motivate an adult child to work toward a better lifestyle if we have paid for their desired lifestyle without them putting in the hard work.

Don’t inadvertently send wrong signals. We need to be clear with our adult child about the impact on our life, now and future, resulting from the money we provide to them. Be clear that we believe they are capable of being a self-sufficient adult both financially and emotionally. If we continually throw money at our children, we’re not preparing them for life; instead, we are robbing them of the opportunity to become fully responsible adults which is an essential skill for us to pass along to our children.

Launching our children into adulthood is challenging at best, both for them and for us.

-Sandra Cleveland-

Sandra Cleveland

Sandra Cleveland

Sandra Cleveland CFP®, CCPS is a Partner and Wealth Manager at BCR Wealth Strategies.