When to Stop Financially Supporting Your Adult Children

Middle aged mother and adult daughter

Please note the publish date of this blog. Financial information, market conditions, and other data mentioned in this post may no longer be accurate or relevant.

Cutting financial ties with your adult children can be a sensitive family challenge. But cutting these ties doesn’t have to devolve into a Shakespearean family tragedy. With tact and mindfulness, helping your children learn to support themselves can bring you more peace and freedom around your own finances.

If you’re currently supporting your adult children financially, it may be time to evaluate the balance sheet and decide if you should make a change. 

How will you know if it’s “time” to cut your children off? And even if it is time, how can you do so in the best, most thoughtful way?

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Know What You’re Paying For

You can’t stop supporting your children without understanding exactly what you’re paying for. You may not even realize how much you’re paying each month or year until you make an itemized list. This is especially true given the aftermath of the pandemic. 

A Creditcards.com poll found that nearly half of parents supported their children during the pandemic. Of those who did, 79% used funds they would have otherwise put toward paying down their own debt, emergency savings, retirement, or other long-term goals.

Most financial support went towards food, housing, and cell phone payments. While these may seem small, they can accumulate into hefty expenses over the course of a year. For example,  these items are based on average prices across the country: 

These expenses add up to $1,821 spent; that’s almost $21,852 per year — more than a 401(k) annual contribution limit (excluding catch-up contributions). In other words, it may be possible to max out your 401(k) after all.

These numbers highlight how parents prioritize their children’s financial well-being over their own— which can lead to substantial long-term consequences like being ill-prepared for retirement or reaching retirement with more debt than planned. It’s easy to see how quickly the numbers add up to bring negative long-term impacts. 

So how do you gain control? Start by categorizing your payments into ‘one-time’ or ‘ongoing’. There is a substantial difference between paying your child’s monthly rent versus helping them pay for their dream wedding.

Ask yourself:

  • What are you paying for (rent, food, insurance, clothing, entertainment, etc.)?
  • How much does it cost?
  • Is it a unique circumstance or are you making regular payments?
  • Are your contributions helping or hindering your children in the long run?
  • Can you afford the payments?
  • Would redirecting those payments to other long-term financial goals be more beneficial?
  • Why are you making these payments?

Answering these questions can help bring context and intent to your spending. While you may not want to kick your kids off the grandfathered-in cell phone rate — (i.e., why move out of a rent-controlled apartment downtown?)— you could consider having them pay you their portion of the bill each month. 

Approaching the process from this angle gives them more financial responsibility, which is critical for developing healthy money habits moving forward. 

Assess Where Your Children are at in Life

In addition to understanding where your money is going, it’s also important to evaluate the stage of life your children are currently in. Consider the following. 

  • Do they have a stable job or are they still looking for full-time work?
  • If unemployed, are they actively pursuing work by applying for jobs, interviewing, resume-building, etc.? You want to ensure your support doesn’t make them complacent.
  • Can they afford their current lifestyle? Downtown rent can be pricey and less affordable with an entry-level salary. Instead of picking up the tab, help them establish a lifestyle they can afford. Avoiding lifestyle inflation early on is an essential lesson in long-term financial wellness.

Having these conversations helps you gauge your children’s financial responsibility. Do they make healthy money decisions? Are they saving and investing toward their goals?

Every family is unique, so your situation will look different than others. You might not mind letting your recent college grad crash at your house rent-free, but you do want them to chip in for other living expenses like food and cell phone bills. The vital lesson is to understand where your children are at and gauge your payments accordingly. 

Prioritize Your Short and Long-term Financial Wellbeing

No matter their age, your children are your children forever. This can make it challenging for parents to prioritize their own financial needs. 

According to Merrill Lynch and Age Wave Study, 79% of parents provide financial support to their children — everything from weddings and college degrees to groceries and cell phone bills.  This financial support culminates in over $500 billion spent annually, and alarmingly, twice as much as parents invest into their own retirement accounts ($250 billion). 

63% of respondents also said they had sacrificed their financial future for the sake of their children. What type of sacrifice are parents willing to make? The most popular answers were taking money from their savings account, living a less comfortable lifestyle, drawing from their retirement fund, and — most surprisingly — going into debt. 

While parents are keen on putting their kids first, prioritizing your own financial wellness can actually help you and your children in the long run. Remember, there is no “loan” for retirement. Most parents (70%) believe their children will support them should they eventually need it, but relying on your kids for financial support in retirement should never be Plan A. 

Your retirement plan depends heavily on personal savings and investments. While Social Security and other fixed-income sources will play a role, your savings will likely comprise a significant portion of your retirement funds. Even though it can be challenging, it’s critical to make your financial future a top priority.

Putting yourself first doesn’t mean you’ll have no financial role in your child’s life. It simply means you aren’t drawing down your own resources, investing less, or taking on debt to support them. It’s all about establishing healthy money boundaries that work for you and your family. 

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The Benefits of “Cutting Them Off”

Letting adult children test their own financial waters will not only have your retirement accounts jumping for joy, but it can also spur your children’s financial independence. 

Without your consistent monetary support, they can implement the good financial habits you’ve worked hard to teach them throughout their lives: budgeting, setting goals, investing, establishing good credit, minimizing debt, and living below their means. 

It may be challenging to watch your kids make money mistakes — like buying a car they can barely afford, racking up credit card debt, or just spending too much — but swooping in to save the day isn’t the superhero move it may sound like. To grow, children must recognize and correct their mistakes so they don’t repeat them. 

It’s a hard-won yet critical lesson that money comes with consequences — some good, some bad. But as adults, it’s up to your children to make those choices. You can be there to listen and offer advice (if they ask), but you don’t have to clean up their mess should something go wrong. 

Of course, actually following through on this is much easier said than done. You will find a balance and compromise that works for your family. You know your kids the best. 

Find Other Ways to Support Them

Money isn’t the only way to support and encourage your children (it isn’t even the key to happiness, love, or loyalty). There are several ways you can be active and present throughout their lives. Consider these ideas. 

  • Keep in regular contact. As life gets busy, it’s far too easy to let communication slip away, so be intentional about the time you spend together, whether on the phone, on video chat, or in person.
  • Prioritize quality time. Many people shifted their priorities during COVID-19, and spending quality time with family was undoubtedly a big one. Make time to visit and simply enjoy one another’s company.  
  • Support them emotionally as they take on new responsibilities and endeavors, like a new job or hobby.
  • Be present to give advice or guidance should they seek it out. 
  • If they have kids, maybe offer to babysit or help out around the house to ease some stress and spend more time with the grandchildren. 

Creating a fulfilling and life-long relationship with your adult children takes a lot of work and effort, but it shouldn’t have to take a lot of money. 

As your children grow and you near retirement, it’s essential to create a plan that supports your financial future — a goal your kids likely share.

Navigating money conversations with family isn’t always easy or straightforward. But if you’re honest and establish clear boundaries, you’ll set the stage for a smooth transition. 

Abacus advisors love creating financial plans that align with your values, for your life today and for tomorrow. Schedule a call today with our team to learn more. 


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