I’m a Financial Expert: What I Wish My Clients Knew About Spoiling Their Grown Kids
Written by
Cindy Lamothe
Edited by
Jenna Klaverweiden
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Parents spending money on their children feels like the most natural thing in the world. It feels good for parents to act like providers — making sure their kids are taken care of even into adulthood.
But taking care of their needs and wants beyond childhood has numerous implications for parents’ finances that aren’t exactly positive.
GOBankingRates spoke to financial experts Dennis Shirshikov, head of growth at Summer and professor of economics at City University of New York, and Ben Klesinger, co-founder and CEO of Reliant Insurance Group and Helping Hand Financial, to discuss how this kind of continual financial support can backfire.
“Many parents don’t realize that continually providing financial support to their grown children can inadvertently hinder their ability to become financially self-sufficient,” Shirshikov said.
While the intention is to help, he said it can create a dependency that prevents adult children from developing crucial budgeting and financial management skills. “For instance, I’ve seen cases where adult children delay making significant life decisions — like pursuing a career change or investing in their own retirement — because they rely on the safety net their parents provide,” he said.
Below are some things both experts wish their clients knew about spoiling their grown children.
Also see two reasons to add your adult children to your bank account — and why you still shouldn’t.
Excessive Financial Support Can Strain Parents’ Own Retirement Plans
According to Shirshikov, spoiling adult children can impact parents’ own long-term financial goals.
“One couple I advised was surprised to find that their generosity was impacting their ability to retire comfortably,” he said. “They hadn’t considered that the funds allocated to their adult children could have been accruing interest in their retirement accounts.”
Mentorship Is a Good Alternative to Direct Financial Support
“A nonstandard approach I’ve recommended is transitioning from direct financial support to mentorship,” Shirshikov said. “Instead of writing a check, parents might offer guidance on budgeting, investing or even co-investing in ventures that promote responsibility.”
Mentoring adult children — rather than providing direct financial support — will be good for both the children and parents in the long run. “This not only empowers adult children but also fosters a healthier financial relationship within the family,” Shirshikov said.
Financial Education Is Important
“As a finance executive with diverse experience, I’ve observed that parents frequently overlook the value of teaching adult children about financial self-reliance,” Klesinger said.
One approach he’s seen work well is encouraging young adults to engage in their own financial education.
“For instance, I’ve helped clients by arranging workshops or financial planning sessions where their grown kids can learn about investments and savings, ensuring they develop a sense of financial responsibility,” he said.
Incentives Can Help
“In working closely with high net worth clients, I’ve noticed that creating incentives for adult children to contribute financially, such as through matched contributions to investment accounts, can foster a sense of ownership,” Klesinger said.
He said parents can still support without overshadowing their children’s need to cultivate their financial independence.
“These strategies help families balance support while promoting individual economic growth,” he said.
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