A guide to financially supporting your grown childrenDate posted: 1/8/16 09:00:00 AM
Parents want the best for their children, but life-long financial support is not practical for many families. Choosing to no longer support a grown son or daughter can be a difficult decision because many young adults face substantial student debt and a difficult job situation.
Follow these tips to help guide when you should cease providing money for your children and how to better ensure their financial independence:
Teach financial responsibility early on
According to Time, one of the best ways to help kids as they grow into financially independent young adults is to teach the value of money and how financial mistakes impact their lives.
"They've learned valuable lessons when they've purchased cheap items that broke almost immediately, and we've had great discussions on how to make wise purchases," said Crystal Paine author of "Say Goodbye to Survival Mode?" and MoneySavingMom, according to Time. "We'd much rather they made $3 mistakes when they are little to hopefully prevent some $3,000 and $30,000 mistakes down the road."
Bankrate echoed this sentiment noting that encouraging your kids to earn money early will help them understand responsibilities and financial management.
Don't be a money tree
While it might be tempting to give your children whatever they want, avoid simply handing over money whenever they ask, noted Bankrate.
"If you set a precedent that you will just hand over cash every time kids ask, the problem can exacerbate as adult financial responsibilities and mistakes take over," said Ellie Kay, a family finance expert, according to Bankrate. "As parents, we owe our children food, clothing, health care and shelter, not fun with friends, designer clothing, cellphones with data plans, a car or a party-school college experience. If kids want those things, they need to earn it for themselves. Otherwise, they feel entitled instead of appreciative."
Consider having your children save up for more substantial purchases so they will be motivated to earn instead of paying for these items when they are unable. For example, if your kids want a car, instead of paying for a vehicle, have them save up a certain amount of money. It will help them realize they are capable of saving and purchasing the larger ticket items they want.
Working for the things they want will also help them value their belongings more.
Teach your children to use credit responsibly
When your children are old enough, allow them to use a credit card to understand how to build a credit score and maintain it. Explain that credit cards can be used as a tool to demonstrate financial responsibility, but the should not be overused and abused.
How to decide when to cut the cord
According to Time, one way to determine when to stop providing financial support is to decide whether the support helps your child become self-sufficient or if it perpetuates his or her dependence on you.
You know your children and helping them with a down payment on a house, rent or student loans will be appreciated for the right reasons.
However, don't be afraid to show a little tough love in certain circumstances. Avoid providing financial support when your children make substantial mistakes that impact their futures, or do not show demonstrable improvement over time.
For example, it's all right to support your sons and daughters while they are attending college if it is within your means. Yet, be sure to have a financial plan in case your children veer off of the college graduate track, like setting clear limits and consistent expectations.
Keep your retirement plans in mind
If you decide you want to provide financial assistance for your child and you feel it will help them gain financial independence, make sure you evaluate your current situation. Paying for your child's education or supporting them while they search for a job can impact your ability to retire at the time you originally planned.
Consider meeting with a financial advisor to determine exactly what you can afford and whether you can put off retirement for another year or two to help your kids out.
Being a parent requires substantial sacrifices. However, know how you can be supportive of your children while also ensuring they become financially independent adults.
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