Supporting Adult Children: When Does Financial Help Go Too Far?
Many parents find themselves continuing to support adult children who have yet to reach full financial independence. While helping out can be a natural part of parenting, ongoing financial support can sometimes do more harm than good. Determining the right balance between lending a hand and encouraging independence is a challenge that requires both financial and emotional considerations. Here’s what you need to know about striking that balance.
Understanding the "Failure to Launch" Phenomenon
The term "failure to launch" is often used to describe young adults struggling to transition into financial self-sufficiency. There can be various reasons behind this situation—student loan debt, an unstable job market, or even psychological factors such as anxiety or a fear of failure. Understanding why your child is not financially independent can help guide your approach to providing support.
However, while it’s important to empathize with your child’s situation, it’s equally vital to recognize when your financial assistance may enable the lack of independence rather than help them move forward.
Setting Boundaries for Financial Support
The first step in determining how much to help is setting clear boundaries. Ask yourself:
What is your financial capacity? Can you afford to continue helping without jeopardizing your own financial future? Remember, your retirement should be a priority—you cannot take out a loan for retirement the way your child can for an education or other expenses.
What’s the purpose of your assistance? Are you helping with essential needs like housing and health insurance, or are you covering non-essentials that might encourage a lifestyle of dependency?
Is there a timeline? Establishing a time frame for support can help prevent ongoing financial assistance from becoming an expectation.
It’s important to have an honest conversation with your child about your financial limitations and expectations. Let them know what kind of help you are willing to provide and for how long. Setting these boundaries can be challenging, but it’s an important step in empowering them to take responsibility for their finances.
Consider the Impact on Your Financial Goals
If you are regularly supporting your adult child, you’ll want to assess how this might affect your financial goals. For instance, consistently covering their living expenses could delay your retirement savings or other financial aspirations.
Before offering help, evaluate:
Emergency Savings: Are you dipping into your savings to assist your child? Maintaining a robust emergency fund of three to six months in expenses is important.
Retirement Plans: Ensure that your retirement contributions remain steady and on target. Reducing contributions to cover your child’s expenses could significantly affect your long-term financial security.
Debt Levels: Consider any debt you might be carrying. Taking on more debt to help your child or neglecting to pay off your existing debt could create a challenging situation for you.
Helping Your Child Transition to Financial Independence
Providing financial support doesn’t mean you can’t encourage your child toward independence. Here are some ways to help them transition:
Set a Budget Together: Sit down and create a budget with your child. Include all of their income sources and expenses, and identify areas where they can cut costs. Teaching them about budgeting can be a valuable life skill.
Encourage Job Search and Skill Development: Support your child in finding employment or pursuing career development opportunities. If necessary, you could offer to pay for a training program or course that could help them land a higher-paying job.
Gradually Reduce Assistance: If you are covering several expenses, consider reducing support incrementally. For example, you might start by asking them to contribute to rent or cover their phone bill. Gradually increasing their financial responsibilities can make the transition smoother.
The Psychological Side of Financial Support
It’s not just about the money. Supporting an adult child financially can have psychological implications for both parents and children. For parents, the worry about whether they are doing the right thing can be agonizing, while adult children may struggle with feelings of inadequacy or shame.
Balancing financial help with fostering self-sufficiency can help prevent these issues. Instead of thinking of your support as a "safety net," consider it more like a "launch pad" that helps them take off on their own.
When to Seek Professional Guidance
Navigating these situations can be complex. Consulting with a fiduciary financial advisor can provide valuable perspective. An advisor can help you:
Assess your financial capacity for providing support.
Develop a sustainable plan that balances helping your child with protecting your own financial future.
Discuss strategies for reducing support over time.
At Parkshore Wealth Management, we work with clients who are making decisions like these as part of their wealth management planning. Talking with an advisor can help you gain confidence in your choices and nurture financial success for both yourself and your child.
Final Thoughts
Deciding how much to help your adult child financially is a personal decision. Strive to make it with both your child’s best interests and your own financial stability in mind. Setting boundaries, encouraging independence, and seeking professional advice can help ensure that your support is a positive force in your child’s life—one that guides them toward self-sufficiency rather than dependency.
Schedule a complimentary, 15-minute chat with a fee-only, fiduciary financial advisor today to discuss your personal situation.
This material was written in collaboration with artificial intelligence (ChatGPT) derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.
Parkshore Wealth Management is a family-owned, independent, fee-only Registered Investment Advisor with offices in Granite Bay and Folsom, CA, and Lehi and Logan, UT. We partner with financially responsible individuals and families who are eager to take positive steps that will allow them to use their money to build the life they desire. The firm is led by Harold Anderson, CFP®, and Daniel Andersen, CFP®, both members of NAPFA, the country’s leading professional association of fee-only financial advisors.