When children are small, it’s natural that their parents strive to do whatever it takes to support them, love them, and pay for their every financial need. Ideally, part of childhood nurturing involves financial instruction or at least a good example of how to manage money. If, despite all good intentions, the kids grow up and have financial problems, those same parents may be called upon to bail their adult kids out. Is this a wise plan? Maybe, maybe not. In the interest of aiding parents of adult children, we are pleased to present the following money advice.
Teach your children to be financially responsible adults
Smart money management begins at a tender age. Moneyed mogul, Warren Buffet, says that children who are given sound financial lessons when they are little are apt to be successful at managing money when they are adults. Buffet notes that while some parents wait until their kids are teenagers to teach them about money management, the best time to begin such instruction is when children are of preschool age. Forbes Magazine adds that most kids are savvy enough to start learning about money and the management thereof when they are as young as three. The University of Cambridge reports that a person’s lifelong financial style and money habits are generally established by the age of seven years.
When grown children ask for money
Joe Franklin is a Certified Financial Planner as well as the founder of Franklin Wealth Management. He explains that adult kids who are generally responsible with money and who fall upon unexpected and temporary hard times may well benefit from a short-term bailout or a rent-free room in the family home. When kids evince a pattern of financial irresponsibility, however, bailing them out may not be such a grand idea.
ReShelle Barrett is a certified financial planner and senior vice president with Bill Few Associates. She explains,
“The reality is that you are not doing the adult kids any favors at all by always bailing them out. If you offer your adult kids a handout every time they hit a financial wall, they may never learn to manage money on their own.”
If your adult child is looking for work with which to support themselves, get them to understand the importance of regular income. Avoid the temptation of just going out and buying them a car that they will need for work. Instead, discuss with them how they can use proof of regular income to make the payments on a Chrysler 300 or other similar vehicle. You can act as a guarantor on the loan and be part of the process as they find their feet.
Tough love, financial style
Joel Larsen, a CFP and principal of Navion Financial Advisors, explains why it’s rarely a good idea to give adult children unlimited amounts of cash:
“People don’t want to cause their kids any pain or any stress. One day you’re not going to be around anymore. Do you want your kids learn to deal with the world when they’re 60?”
The gist is, offer unlimited love and emotional support to your adult children, but don’t allow them to lean on you financially for an extended period of time. In the long run, allowing your kids to work through a hardship on their own may help them grow into happier, stronger, more independent adults.
Ava Norris has three grown-up kids and has her first grandchild on the way making for a very exciting time. Ava shares some of her parenting wisdom online through her articles as well as participating in forums and groups.