How to Help Your Kids Without Hurting Yourself Financially

According to a new survey from the Pew Research Center, many young adults are still reliant on a parent for financial help. Just 45% of young adults between the ages of 18-34 say they are completely financially independent.

That’s not great news, but when you dig a little deeper, I think there is reason for some optimism. Among young adults between the ages of 18-24 two-thirds report they rely on parental financial assistance. That isn’t terribly surprising, given many are still in school, and the earliest years of launching into adulthood come with challenging start-up costs and a learning curve on making ends meet.

What made me a bit optimistic is that between the ages of 25-29, 45% of young adults report they are financially independent and for young adults ages 30-34, 67% say they are fully on their own.

That’s a promising trend line. As young adults get established in their careers, they likely have more money, and the numbers suggest many are focused on moving toward financial independence.

Now of course, I worry about the fact that leaves 1/3 of adults in their early thirties still relying on their parents for some level of financial support. That’s not likely a good situation for either the kids or the parents.

Nor am I giving the green light to parents to always help in any way they can. The only form of giving I will condone is when it is helping a child build toward financial independence (not merely bankrolling their wants) and when the giving does not jeopardize the financial security of the parent.

Some inter-generational support tips I hope anyone with a young adult in the family will consider:

Say no out of love, rather than yes out of fear.

The same Pew report notes that plenty of parents say the financial support they provide their kids comes at the cost of hurting their own financial situation. This is where one of my most important rules becomes so very important:

For a gift to be generous, it must be generous for the giver as well as the recipient.

If providing financial help is hurting you, how is that generous? I am asking you to carefully review how you are helping a child. Is it absolutely necessary, or just that you want to make life easier for them? Do you fear they will love you less or be upset if you don’t help?

I am going to ask you to take a deep breath and have more faith in your children. I think when you tell them you need to prioritize your own financial security, they will not only respect that, but maybe learn plenty from it as well.

Live within your needs and below your means.

Do you do this? Do your kids have any clue what this means? If you haven’t already instilled the lesson of Needs v. Wants, I hope you will do so ASAP with your adult child. Helping them with needs may be okay (if it doesn’t put your finances in jeopardy), but I really don’t think you should be paying for their wants. How does that help them become strong, confident adults who are in control not just of money, but their lives?

Look for gentle teachable moments.

A high percentage of young adults say their parents help them out by covering cell phone and/or streaming costs. Keeping them on the cellphone plan and letting them stream on your account may seem so small it doesn’t matter. But I am going to ask you to flip your perspective here: those are such relatively small sums, so it is not going to be terribly hard for an adult child to handle the payment. And that’s a step on their road to financial freedom. Maybe those are the first payments they set up as auto-payments, which is such a key muscle to build as it plays into building a strong credit score.

Make sure you are truly helping.

If you can afford to provide some financial assistance, you should always be asking yourself: what is my help building towards? I strongly encourage you to earmark your support for specific agreed-upon goals. For example, you will help with rent so your child can put more toward paying down student loan debt. Or you will gift a child with earnings money so they can contribute to a Roth IRA. Financial support for a young adult should always be focused on how to help them build financial security. Which strikes me as a wonderful piece of your legacy that you can work on today.