As I interviewed personal finance experts about how parents can cut back on the financial support they’re giving their adult children, one fact stood out to me: Everyone’s parenting philosophy is different. And it often depends on our kids, as well.
Anne Lester, author of “Your Best Financial Life,” explained it like this: The amount of financial support you give your kids depends on “how you define your role as a parent.” She recalled her grandparents lending her parents $20 to help them buy a bed, for example, with the expectation that they would pay the money back.
My own parents helped me out in my early 20s, too: They invited me to move back home while I job-hunted and eventually landed my first position with a steady paycheck. I stayed for months, not only because I enjoyed being with them and my younger sisters, but because it felt great to save money instead of pay high rent prices.
My parents made it clear that they expected me to contribute to household expenses, given the fact I earned an income. I was, after all, increasing their weekly grocery bill and monthly utilities just by sticking around. So each month, I handed over $400 from my paycheck.
I’m not alone in this arrangement. Most young adults who live with their parents say they contribute financially in some way, such as paying for household expenses or rent, according to a report released earlier this year from the Pew Research Center.
What parents do with their children’s contributions varies. Some of the money experts I interviewed suggested that, if parents are able to save some of their kids’ contributions, they could return that money when they move out. That way, their adult children could put the money toward a down payment or rental security deposit.
My parents opted to use the money to defray their expenses, which helped me internalize the idea that I should be contributing — and not just taking advantage of their generosity.
Now, as a parent myself, I’m constantly looking for ways to help my children learn the value of contributing. My preteen and teenager earn an allowance by completing certain household tasks, such as cleaning up the kitchen after dinner or, more recently, making dinner for the family.
Everyone parents differently, but a handful of guiding principles emerged over and over again in my conversations with financial experts about how they help their own children:
Make sure everyone benefits
Done wisely, parents can benefit from the financial help they give their children in the long run. I loved hearing about this concept from Lynnette Khalfani-Cox, a personal finance expert and author of “Bounce Back: The Ultimate Guide to Financial Resilience.”
While not an affordable option for everybody, she and her husband managed to purchase housing for their children to live in when they were still in school. The properties grew in value over time, which gave the family additional assets to use or sell as needed.
Adult children can also help their parents in other ways, such as making them dinner or taking on other household tasks.
Schedule frequent discussions and make adjustments
If you are helping your young adult children financially, schedule time to talk about how the arrangement is going, so you can make adjustments.
Giving kids a chance to voice their own concerns is also important, along with providing any needed emotional support on their journey to financial independence, says Mindy Oglesby, certified financial planner and founder of Oglesby Wealth Strategies in Watkinsville, Georgia.
Whether you’re paying for cell phone bills or rent, some adjustments will probably be necessary at some point. Rose Niang, CFP and director of financial planning at Edelman Financial Engines, joked that clients are constantly complaining about the cell phone bills they’re paying for their adult children, more than any other bill.
The bottom line is that these arrangements are temporary by nature — adult children grow older and move on with their lives. So, ideally, we can make this time of financial dependence as enjoyable as possible.
Soon after I moved out of my parents’ house, I got married, so now I look back on that period at home as a gift. It meant I spent more time with my parents and younger sisters as a grown-up. The savings were just an additional side benefit.
