Merrill Lynch and Age Wave conducted a survey in June 2018 that showed 79 percent of parents are financially supporting their young adult children in some way. This support runs the gamut from significant expenses like mortgage or rent payments and wedding to smaller things, such as cell phone bills or groceries.
There are some alarming numbers within the survey:
- 50% of parents take money out of their savings to support their adult children
- 43% of parents reported living “less comfortably” to support their adult children
- 26% of parents go into debt to support their adult children
- 19% of parents have delayed their retirement(!) to support their adult children
Many people think that being a parent means supporting your children no matter what. But more money for your kids means less money for yourself later. You may even create a future burden for them as they may have to support YOU.
Not only that, but some children will never learn to be fiscally responsible if their parents swoop in to rescue them every time they run out of money.
When You Should NOT Give Money to Adult Children
According to most financial experts, you should avoid (or at least think twice about) giving money to your adult children if:
- You don’t have between three and six months of emergency savings yourself
- You have outstanding credit card debt
- You don’t have enough saved for your retirement
- You’re unemployed, underemployed or at risk of losing your job
The most important thing you can do for your kids is to educate them about money! How?
- Help them create a budget
- Teach them about retirement savings
- Warn them about depending on credit cards
Even if you are in a good position to help your kids, it’s a good idea to put the terms of the support in writing – how much you are willing to give, for how long, and under what conditions. Your children should never consider you to be a bottomless well of generosity.
Need help staying disciplined when it comes to financially supporting your children? A good retirement plan can help you determine just how much support you can provide without endangering your financial security. Get started today by requesting a complimentary, no obligation conversation about your financial situation with one of our financial advisors.