How To Help Your Children Without Financially Enabling Them

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Every parent raises their kids hoping they seamlessly transition to adulthood and become fully-functioning members of society. Unfortunately, we’ve all seen the opposite scenario happen as well. Failure to launch seems to be an increasingly prevalent problem. With college expenses rising, it’s no surprise adult children are struggling to hit the ground running–both during college and after graduation. 

Although you can’t always control college costs, or control your child’s ability to land a high-paying job for successful “adulting”, there is some good news:

You can help your children without financially enabling them.

This process can start as early as you choose. However, if your kids are already in high school or college, it’s not too late. Setting boundaries and setting them up for success are two things that will benefit you and your kids, now and into the future. Wondering where to begin? Let’s dive in.

Start With Financial Education

Age-appropriate financial education is key. Too often, parents send their kids off to college without any knowledge of the financial basics they’ll need to thrive. To combat this, focus on ways you can start your child’s financial education early. Age-appropriate ideas might include:

Elementary School

Create an allowance system where your kids can work around the house to earn a small amount of money. Once they’ve started earning, show them how to set up a plan for their money. 

For example, you could show how to divide their earnings into giving, saving, and spending categories. Making basic budgeting a game can help your kids have positive feelings about earning money, while teaching them about the tough spending choices they’ll face once it hits their piggy bank.

Middle School

Your middle schooler may be working odd jobs (like pet-sitting or house-sitting for neighbors), and this will increase their spending money. Stay consistent with your giving, saving, and spending lessons. At this stage, you might even talk about putting some of their earnings aside to save for college. 

Middle school is also a great time to introduce more in-depth financial strategies. There are many kid-friendly money courses available, and it might not hurt to sign them up. At this stage, your child should have a clear grasp of budgeting, saving, and prioritizing where they spend their money. 

High School

Your teenager should be part of financial conversations that impact the family. Talking about a family budget or comparing college costs are all conversations that should happen openly. Now might also be a good time to encourage teens to pursue part-time work and earn money for non-essential expenses, like a Friday movie night with friends.

Invite Them In on Family Financial Conversations

It can feel uncomfortable to discuss family finances with your kids, but it’s one of the best ways to help them grasp real-world money decisions. Open up the conversation early and often. Talk about your family budget, and walk your kids through different ways you need to prioritize spending. The more they see you and your spouse/partner setting priorities or sacrificing non-essential spending to boost savings and pay off debt, the better.

Build a Budget Together

Budgeting will obviously look different at various stages of your child’s life. If you have an elementary schooler, have a conversation that helps them set spending priorities with their allowance money. Showing them what they can and can’t afford, then demonstrating how to decide between two “wants” can create a positive, long-lasting impact.

But even if your child is already in high school or college, this is still an applicable practice. Many young adults struggle to budget, often because they haven’t been taught how. If you find your young adult child struggles with overspending, it might be time to sit down and help them work out a budget that meets their needs. At this age, it’s important to keep budget conversations streamlined. Break their expenses into a few key categories:

  • Saving
  • Essential living expenses (gas, food, etc.)
  • Non-essential living expenses 
  • Giving (if applicable)

You can also recommend they download an app like Mint or YNAB that will guide them through the budgeting process in a digital way.

Let Them Know Up Front What You’ll Help Pay For

If your child is older (high school and up), you should have a candid conversation about what you will and won’t pay for. For example, if your high schooler recently turned 16 and is inheriting an older sibling’s car, you might say you’ll gladly cover their car insurance but they’re responsible for gas. 

This gets increasingly important as your kids go through college. Being clear about small expenses will help them shape their monthly budget. Another example: you might be willing to cover book costs and school supplies, but they’re responsible for their internet bill and groceries. 

The conversation also applies to bigger expenses. For instance, you might be comfortable covering their tuition and boarding based on the savings in their 529 plan. However, you might be unable to cover all other living expenses (essential or not). Be clear about the type of support they can expect from you, and help them budget accordingly.

Encourage Them to Work for Non-Essential Expenses

Many young adults choose not to work in high school and college to focus on their studies. Unfortunately, this mentality is rarely sustainable for the entirety of their college years – especially if you’re unable (or unwilling) to support their spending habits. This is where encouraging your kids to work for all of their non-essential expenses can be critical. 

Unfortunately, parents often fall into the trap of believing it won’t be possible to balance school and work. It’s true that some kids struggle with this balance at first. And yet, like all things in life, practice makes perfect. If you find your child is struggling, consider talking to them about time management. 

Time, just like money, needs to be budgeted to find success and fulfillment in life. Sometimes this means not visiting with friends if there’s homework after a work shift – and that’s okay. These are life lessons that will serve them well into adulthood.

Not sure if your child can hold down a job during school? The next best thing is help them find a high-paying summer job to boost their savings. This will give them some cushion heading into the next school year. 

Consider Setting Up a Roth IRA and 529 Plan in Their Name

One primary way to support kids without enabling them is giving them the tools they’ll need to successfully save for college and beyond. A 529 plan is a fantastic place to start. This account is used specifically for college savings. Once a contribution is made, the funds grow tax-free and can be distributed for any qualifying education expense. Opening a 529 plan early in your child’s life lets you and your loved ones make contributions toward their future tuition and education expenses. As your child gets older, you can encourage them to make contributions as well. 

Birthday money, summer or part-time job earnings, or other unexpected windfalls are all fair game. It may make sense for your child to set up a “rule” for themselves that 10% of any earned or gifted money goes into their 529 plan. This teaches them the principle of saving and makes their college savings a priority.

You can also open a Roth IRA for your kids. These accounts are funded with after-tax contributions and can be distributed tax-free later in life. Most people use their Roth IRA for retirement. However, once it’s been open five years or more, penalty-free distributions can be taken for qualifying expenses – like first-time home buying or college education. This is a fantastic vehicle for both you and your kids to start contributing toward their financial future.

Ask For Help

Every family and every child is different. Some kids are more expensive and have different needs. If you’re unsure how to help your kids without financially enabling them, it might be useful to bring in a third party. A fee-only financial planner can help you determine the best way to help your children make empowered money decisions, without sacrificing your own financial wellbeing. Want to learn more? Contact us today!


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