6 Easy Ways to Cut the Financial Cord With Your Kids

It's time for your overgrown birds to leave the nest.

A parent’s love for their child knows no bounds. There’s a reason this cliche exists: Data backs it up. According to a survey conducted by Merrill Lynch and Age Wave, 79 percent of parents provide financial support of some kind to their adult children — to the tune of $500 billion a year. What makes this figure even more outrageous is that it is double what parents are contributing to their personal retirement accounts. In overlooking their own needs, moms and dads are costing themselves security in their golden years.

Every situation is different, but if a child is grown and mentally and physically able to hold down a job, it’s likely time to cut the cord. This doesn’t mean moms and dads have to evict their kids immediately and start ducking their phone calls. On the contrary, there are some simple — and gentle — ways for parents to stop enabling their grown children and start empowering them instead.

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Educate Your Children About Money

Unfortunately, financial literacy is not taught in all schools. Somewhere along the line, someone thought quadrilaterals and iambic pentameter were more universally beneficial than learning about taxes. So, the fact that your adult child doesn’t know how to file them shouldn’t be that shocking.

That said, just because they don’t know something doesn’t mean they can’t learn. Sit down and teach your kid the basics of budgeting, for a start. Then, when they’ve mastered that, you can move on to more complicated things: think 401(k) plans, taxes and investing.

And, when your kid inevitably starts huffing and puffing out of frustration, remember the old “teach a man to fish” adage. You’re helping them help themselves.

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Speak Their Language

Most people don’t balance a checkbook anymore. Heck, they don’t even teach cursive in some schools any longer, so the next generation might not even know how to write a check. Nearly everything is technology-based.

If you want to speak to your grown child about personal finance topics, you’ll likely need to use tools that they’ll understand. Read up on budgeting apps like YNAB or Qapital. Look into online banking. By taking things from analog to digital, things might be a little easier for them to understand.

See: Best Budgeting Apps and Tools for 2019 — Mint, YNAB and More

Help Them Understand the Big Picture

Parents support adult children out of love. Children go along with the arrangement for two reasons: First, it’s a pretty great deal for them, and second, they don’t have insight into how it is affecting their parents financially.

It’s time to be transparent and appeal to your child’s empathy. No need for a guilt trip; just tell them clearly, using actual figures, how this is eating up your savings and affecting your future retirement.

If empathy isn’t their strongest trait, it might be better to explain to your child that if you don’t have money for retirement, you could wind up being a financial burden on them in your later years. That’s likely to get them thinking.

Read: Will Your Kids’ Cap and Gown Kill Your Retirement?  

Make It Clear You Care

If you want to continue supporting your adult child, you simply have to rethink what the word “support” means. As much as you’d like to be, you won’t always be around, so you can support your child by ensuring they aren’t dependent on you for help. Just make it clear to them that you’re making your decision out of love — not resentment — and a desire to see them succeed.

Ease Them Into It … but Set a Hard Cutoff Date

What do you do about grown children who expect money? You’ve set a precedent by providing it to them time and time again, and stopping cold turkey can be awkward for both parties. It’s OK to ease into it. Sit down with your child, calendar in hand. Make a plan for when things will fall to them to handle. Maybe on May 1, you stop paying for their cellphone. On June 1, you no longer pay for their car insurance. It’s alright if this process takes months, but be sure to set a date for a hard stop on financial help.

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Stay Strong

Above all else, you have to stay strong. If your kid tries to make you feel bad, gets angry with you or tries to play one parent against the other, you have to stand your ground. Understand that many, many people don’t support their children past the age of 18, so you’ve already gone above and beyond. You’re not being selfish; you’re putting yourself first — for once.

Click to read about the financial mistakes one woman made because her dad spoiled her.

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