Is Helping Your Adult Children Delaying Your Goals?
By Yusuf Osman, MBA
As parents, it’s in our nature to want to help our children out and set them up for success. But at what point does helping out your adult children mean you have to sacrifice your goals. According to a recent survey, over a quarter of Canadians that are delaying retirement say they are doing so because their children still require financial support. (1)
I work with a lot of female clients, and I see that mothers especially have a hard time saying “no” to their adult children when they ask for help. But the good news is that you can prioritize your financial future without completely kicking your kids to the curb.
Here are four tips for approaching this delicate topic and establishing boundaries so both you and your children can succeed financially.
1. Have a Heart-to-Heart
Kids of all ages are used to their parents taking care of their needs, so they may not realize their reliance on you is setting you back. Make sure you and your adult child are on the same page so that there aren’t unrealistic expectations. It might help your child if you are honest about your financial situation. Let them see the big picture so they understand the financial implications of their choices.
This will likely be a difficult conversation, but they’re adults…they can handle it! Be as specific as possible, explaining how your financial support has postponed your retirement date or forced you to dip into your RRSP or RRIF. If your children are upset, remind them that by pursuing your own financial security, they won’t have the financial burden of supporting you later in life.
But don’t just tell them you’re cutting off financial support; give them the tools they need to succeed on their own.
2. Offer Support Outside of Finances
Just because you’re halting the flow of money doesn’t mean you are cutting off all forms of support. You have decades of wisdom and experience that you can pour into them that will help them as they gain independence. Ask how you can be there for them moving forward. Could you help them look for a job? Offer to search for housing within their new budget? Maybe walk them through how to negotiate a raise at their current job? There are many ways to help your child without handing over the cheque book. Make sure they know you’re still there for them.
3. Equip Them With Practical Skills
Living within your means is easier said than done, but by teaching your kids how to budget, you give them a framework to make financial decisions and take ownership of their future. As young adults start their first full-time jobs and adjust to possibly living on their own or taking on more expenses, they need to learn how to look at the numbers and align their lifestyle with their income. This means ignoring society’s incessant messages that they need what everyone else has.
Setting a budget will help them stay on top of their debt, know where their money is going each month, and see how much they are saving. The first rule of financial security is spending less than you earn and saving the difference. If your adult child can master this, they’ll soon be on their way toward financial independence. While the parameters of a budget depend on an individual’s specific situation and goals, you can get your child started by giving them tangible examples of what it costs to manage a household and help them map out how they will divide their money among essential expenses, savings, debt payments, and non-essentials.
And since your adult children likely rely on technology for everything, encourage them to use a budgeting app to track their money and stay on top of their accounts.
4. Set Boundaries
Don’t want to cut your kids off cold turkey? Give them conditions on how long and under what circumstances you’ll continue to support them. They’ll learn nothing if you hand over money without a thought. But if you introduce conditions and set a clear path for getting them where they need to be, they’ll learn to be responsible.
These conditions might include treating the money you give them as a loan. If they need money for rent, create a contract for when they’ll pay you back and what they’ll owe you in interest, if anything. If your child is jobless and needs to move back home, set a time limit to how long they can stay and how they’ll contribute to the household. The bottom line is to make them earn the money you give them so they understand the value of it.
Prioritize Your Financial Future
No parent ever enjoys saying no to their children, especially when it comes to helping them out financially, but this tough love is the best step to set both you and your children up for financial success.
One of the best gifts is teaching your children how to manage money. When they set a steady course toward their own financial success, they are more equipped to live within their means and it helps you stay on track when it comes to your financial goals.
If you’d like tips on how to approach this conversation (and other financial conversations), I’d love to help. I enjoy working with clients multi-generationally so we may be able to help your children understand the bigger financial picture as well. Want more information? Contact me at (613) 230-5895 or firstname.lastname@example.org. And check out what my clients think about working with me here.
Yusuf Osman is a Senior Investment Advisor at Argosy Securities Inc., an independent full-service financial advisory firm dedicated to helping clients create financial freedom, security, and peace of mind. With over 30 years of experience in the finance industry, Yusuf is committed to educating, engaging, and inspiring as many people as possible to take control of their finances. He spends his days developing a thorough understanding of his clients’ lives, concerns, and dreams to help them build a program that keeps pace with changes in both the markets and their lives. Yusuf graduated from the University of Ottawa with a bachelor’s degree in Science and earned an MBA in Finance from Queen’s University. To learn more about Yusuf and his Dynamic Wealth Program for Women, go to https://www.argosy-osman.com/women or connect with him on LinkedIn.