Your adult child needs financial assistance. How to know when to assist and when to cut the cord. 

Help your adult kids with their cellphone bill? In THIS economy? 

Yes, exactly. This economy, as we’re all painfully aware, is stacked against younger people in more and more challenging ways as the wealth gap widens, rent prices soar and wages stagnate. Not to mention a little economic blip called COVID-19, which destabilized younger and older people alike, something many are still struggling to recover from.

For millennials, the homeownership rate is about five percentage points lower than it was for Gen X when they were in their 30s. And it’s about seven percentage points lower than for baby boomers when they were in their 30s, according to U.S. Census data. And, according to the news site The Hill, nearly half of American parents with adult children continue to support them financially — spending $1,442 a month on average. 

Citing a survey, The Hill notes that parents who pay bills for an adult child are most likely to cover relatively modest expenses such as groceries and cellphone plans. Yet, they add, more than half help pay a child’s mortgage or rent, a monthly expense that averages more than $800.

So, in the realm of adulthood, where independence collides with the enduring bonds of family, a new paradigm is emerging — managing adult children and their finances. A task fraught with emotional complexities and financial considerations, this chapter of parental guidance is one that requires empathy, clear communication, and a strategic outlook.

Meet Jared Paul, a seasoned certified financial planner and the managing director of Capable Wealth in Albany. With over 15 years of experience, Paul has encountered scenarios where families grapple with the desire to provide for individual members while also maintaining financial stability overall. As he affirms, understanding the full scope of the situation is crucial before embarking on this journey.

“Understanding the full situation — is this a one-off thing that you need cash for the month instead of a multiyear perpetual thing? — that’s very key to understanding how to give advice,” Paul says. It’s not just about the financial aspect but also about the long-term implications and the underlying dynamics of the parent-child relationship.

The balance between assisting and enabling is delicate. Parents might feel compelled to always help their children, but this should align with their financial capacity. Financial Consultant Gretchen Meyer, owner and president at Gretchen Meyer Financial in Latham, agrees that communication is important in navigating finances with your kids. But, she says, she’s also seen rising interest among Gen Z young adults to learn more about financial health and hygiene. “We can help them invest in themselves for what they want for their own next stage,” Meyer says. 

In fact, to meet this rising demand, Meyer has launched Core Planning, an affordable ($75 per month) service for young people just getting on their financial feet. “The new offering provides financial coaching, career advice, cash flow guidance, debt analysis, and more,” she says. “It’s designed to bridge the gap for young individuals who may not meet the asset criteria of traditional advisors. This program addresses their financial needs and helps them make informed decisions.” 

That financial literacy will help in conversations about how much you’re helping them, and for how long. But many families shy away from discussing financial matters, because it can be awkward, vulnerable, and uncomfortable. We’re taught that money matters are private. 

Parents might not realize, though, that their adult children are under significant and substantial financial pressure and, conversely, adult children might not recognize the constraints of their parents. “Kids might not know what the financial situation is,” Paul notes, emphasizing the importance of open dialogue.

If both parents and adult children have evaluated their circumstances for what they have and what they need, however, the numbers can essentially do the talking. When you have your comprehensive financial plan, both Paul and Meyer say, then you see clearly what you’re able to spend while still making progress toward your goals of retirement, buying a first or second home, or anything else you’re planning for. 

So gradual transition is key, especially when it comes to support that has been ongoing. Paul and Meyer advise against abruptly cutting off assistance, especially when it involves emotional support. Finding a middle ground and developing a game plan together can make the transition smoother and maintain the integrity of the parent-child relationship.

Strategies may vary based on circumstance. If you’re covering a rent payment, for example, and your adult child isn’t able to make the payment on their own or with roommates, are you willing to help them find a new place? Or even allow them to move back home and save some cash? These decisions should be rooted in a clear assessment of financial capacity and the potential strain it might place on your family. 

Bar chart with statistics on adult children supported by parents
Data source:

Empathy is a vital thread that weaves through this narrative. “People don’t always come to a situation with empathy,” Paul says. People’s financial situations are complex and unique and can even be quite stressful; assuming motives without understanding the full context can lead to misinterpretations. Suggesting or accusing your adult child of being lazy, entitled, or codependent won’t be productive. Remember: It’s hard out there, for everyone. 

Still, the ultimate goal is self-sufficiency, no matter what generation you’re a member of. “I think people, no matter what the generation, want that ability to stand on their own two feet,” Paul says.

For parents and adult children alike, education is a potential bridge to understanding. Meyer notes that budgeting and tracking spending in a mostly cashless society is much more challenging than it was during the checkbook-balancing years. Knowing that money and finance is ever-evolving and assuming good intentions are keys to keeping harmony. That’s why she recommends working on a plan together, with clear deadlines and outcomes, so that there’s no misunderstanding about what your child can count on and what they need to figure out. 

With a clear roadmap and communication, managing adult children and finances doesn’t have to be a fight. The journey involves balancing present support with future independence, and embracing empathy as a guiding principle. As Paul sums up, “Navigating this terrain requires thoughtful planning, a willingness to adapt, and above all, understanding.”

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