Tag Archives: adult kids

Financially Supporting Your Adult Kids? Maybe…

According to a CIBC survey last week, one in five parents are helping their adult kids with money to the tune of $500 a month. 71% said it was through free room and board, almost half by paying for groceries and household expenses, and almost 40% by paying cell phone bills.

If experts say it is the generation of helicopter parents, it only stands to reason that becomes enabling them as adults. But we do have to exclude parents helping kids going to college or university! The’ going to school deal’ with be different for every family, and seems reasonable for me as an outsider. This survey also doesn’t account for families who certainly have the wealth to help. If kids have a parent who’s a PHD (Pappa Has Dough), why wouldn’t they make the call for money?

But another survey some months ago found that 80% of parents don’t talk to their teenage kids about money – and this is the result. If they don’t know, they can’t manage their money, learn priorities, or boundaries as adults.

If your adult kid is not going to school and you’re not wealthy, there’s a big problem here. Your love for your kids is unconditional, but you only have a finite amount of money and little time to save for retirement in comparison to your kids. Broke people cannot help others – family or not. I know that’s easy to say when your kid calls – but it’s the truth.

The time to lay the groundwork for this starts at age 14 or so. But here you are now needing to learn to say no in a loving way, and to set financial boundaries if you cannot honestly afford it!

The old Ronald Regan saying of: Trust but verify applies here: If it were me, and that’s how I always discuss things, my kid would need to email me their last two credit card and bank statements. I want to see what money goes in and where it gets spent. Think about it: Priorities 101 say: Food, rent, utilities, transportation. If they cannot even afford food, there’s something WAY bigger here than a few dollars. I would tell my kid that I love them and that’s exactly why I won’t send money. But I’ll have them hooked up with a couple of part-time job interviews by the end of the day.

See, the problem is that many kids won’t take a job they think is “beneath” them. They’re holding out for the BIG job and BIG title. Sorry, eating and shelter trump the cool job in favour of any job to bring in money. A part time job with limited income will immediately re-arrange the financial realities and priorities they didn’t learn at home or at school.

If you do help AFTER you’re comfortable knowing it’s not a lazy, budgeting, blowing through money issue, you need to be smart about it: Make the check for part of the rent payable to the landlord. That way you know where the money goes. Get them a gift card for groceries. It has to be a grocery-only store, so not Wal-Mart (they sell too much other stuff that isn’t from the food family). Make it clear this is an exception and not a monthly support payment. It gives them a 30-day heads up to get that part time job or change their priorities.

Helping Your Adult Kids Part II


As we discussed last week, if you want to help your adult kids, you need to be super careful. I know it’s hard to say no, but I also know your kids will try you first. Now, this is assuming we’re dealing with adult kids, not living at home, and you’re not the rich parents.

What’s scary is that many parents in the survey admit they’re delaying their retirement as a result of helping their kids – that’s insane! The $500 (average, according to the survey)  you give them each month is $6,000 a year. But it’s not that simple: That’s $6,000 you’re not putting into your RRSP. As a result, it can’t compound! $6,000 turns to $12,000 in seven years, to $24,000 in 14 years and $48,000 in 21 years. So if you’re in your mid 40s, you’ve lost out on almost $50,000 of money with that $6,000 you gave them. If you do not have the extra money – do not do it!

I am a big advocate of giving your adult children money if you have it. They will inherit it in any event, and it’s much better to see the benefits and monitor their behaviour with money. That’s pre-supposing that you have at least one or two million dollars in liquid assets to draw on for your retirement. Liquid assets are investments and don’t  include the equity in your home. After all, you can’t eat your house.

You should do it – but only do it when your adult child has a full-time job and is already financially responsible and living on less than they earn. If not, you’re just feeding and reinforcing their bad spending habits and they will never learn the lesson. Maybe it’s $20,000 for a down-payment, given your married adult child the money to have one partner afford to be a stay at home parent, or paying off/paying down their student loans. That’s after you have seen at least a two year track record of on-time payments.

If you still have teenagers living at home, please start the money talk. It’s not a one-off conversation – it’s a lot of small conversations for years. Show them your $2,000 credit card bill, show them that it has right on the statement it’ll take 25 years to pay at minimum payments. Show them a basic budget of food, rent or mortgage, utilities, gas, insurance and all the things they had no idea actually cost money!

Tell them early and often that they can count on $2,500 (or whatever your fixed amount is) when they go to university or college. How would they get the rest? What kind of part-time job would they think they’d have? Could they get a bunch of scholarships? Would they live at home?

You need to take care of yourself before you can take care of others, and that includes your adult kids.

Can You Check Your Adult Kids’ Credit Card Statement?

Last week, I was asked a really good question: Does a parent have the right to see their son or daughter’s credit card statement and get personal financial information from them?

Well, that depends. How did you raise your kids? Will their mindset be that my parents care, or that you’re just going to go nuts on them? Do they trust that you’re non-judgmental and coming from a mindset of wanting to help or just criticize? In my opinion, if they don’t want to show you – you have all the answers you’re looking for already! If it were me having an adult kid living in my home, eating my food, sleeping in my house, it’d be part of the written (yes – written since they have memory problems at times..) rules for living at home!

If you want to make sure they will share financial stuff, you need to make money, budgeting and savings a conversation starting at age 5 or 6. You need to start at age 15 or so by showing them one of your credit card statements. OK, maybe not the big one, but one of the smaller ones. Show them the limit, the rate, balance, minimum payment and that box which shows: at minimum payments, your balance will be paid in full in 28 years!

There was a study a few months ago that showed 75% of parents don’t and won’t talk about money with their kids. That’s just stupid as it’s setting them up for guaranteed failure as adults. So this 75% of parents just set them loose at age 18 and wish them luck figuring out financial stuff?

Before it even gets to that, make sure they read the It’s Your Money book chapter on building credit. If nothing else, it’ll make sure they do it right, do it inexpensively, and do it without you risking everything you have to cosign for them!