Where is the Line on Paying Your Adult Child’s Expenses?

The old adage used to be that parents were financially responsible for their children up to the age of 18. After that, they became legal adults and financially responsible for themselves. Years ago, many teens couldn’t wait for their independence so they could move out and strike out on their own. I know that was how I thought back then but things have changed significantly for parents when it comes to their adult child.

As parents, we tend to do everything in our power to help our adult child. But where do you draw the line about paying for their expenses? Here's why it's important to limit your payments and what to tell your child.

Fast forward to today and now many parents continue to provide their children with financial assistance in some form throughout their college education, and often beyond. There have been several reasons for that happening.

What Has Changed?

We have just come through a 10-year period with a depressed job market. Plus more kids are attending college, and college is becoming ever more expensive saddling lots of families with increased debt. Then there is the sticky matter that many kids are not particularly motivated to venture out into the world. The comfort of home is huge attraction. With many adult children ages 18 to 35 living at home with their parents and many more who are living on their own but still receiving financial assistance from their parents, the question is, where should parents draw the line and stop paying for their grown children’s expenses?

What Expenses Are Parents Paying?

The list is a pretty big one. Parents pay things such as car payments and car insurance, medical insurance, credit card bills, housing and basic living expenses. Of course, it’s pretty difficult to say no to your child even when they are grown up and hurting financially. But when a parent provides too much financial assistance to their adult children, it is a disservice in the long term and can come at a hefty price.

If you are taking on extra debt or delaying your retirement to help your adult child, you could be making a mistake and putting your own financial future in real jeopardy.

What Is the Real Cost of Being Too Generous?

Financial experts recommend that parents should fully fund their retirement even before saving for their child’s college expenses. Saving for retirement should take precedence over helping a child meet living expenses, especially if the adult child is short on cash because of poor life choices or lack of drive in his or her career. That happens frequently.

As a parent, you paid for all of your kid’s expenses their whole lives, from baby needs and in many cases all the way through college and even sometimes beyond that. But at some point you have to ask yourself that really big question. When is it time to draw the line?

There is always complexity when it comes to family finances because managing money is just not treated as a team sport. In fairness to the kids, they do not know when they are young about family finances but you have to face a real fact: at some point you and your spouse have to begin to worry about your own financial needs and of course your retirement. How are you ever going to retire? You probably never, ever discuss your financial situation with your kids when sitting around the dinner table. Maybe you should, when they’re of an appropriate age.

You may wind up putting a bandage on your child’s problems with money and by doing so risk your financial security. That’s why there has to be some limits placed on these situations for everyone’s benefit.

How to Handle Your Adult Child’s Request For Money

The best way to handle an adult child’s request for money is to set the groundwork for financial independence when they are young. While it may be tempting to continue to pay for your child’s expenses during college and beyond, young adulthood may be the best time to send them out on their own financially. If you are going to pay for a portion of their college education, clearly outline for them what you will help pay for, and what you will not. You may encourage your child to get a job during college to offset some of their living expenses.

If your child finds that they are in a financial bind, you may consider helping them out, but let him or her know it is one-time assistance. After that, difficult as it may be, you should let them handle their own finances and suffer the consequences. As tough-talking as that sounds and as much as you love your child, adults do not have the right to mooch off their parents simply because the alternative is hard. Of course there may be exceptions, particularly if their difficulties couldn’t be avoided, such as large medical expenses.

But if your kids have chosen to stay in school for a decade, why do they get to have all the benefits of your (hard working) life while they are students? And if they’re old enough to bring another life into the world, they’re old enough to put a roof over their own heads, and food and clothes for a baby. Sometimes suffering consequences is the best way to learn not to make the same mistake again.

Teach Your Children While They’re Young

Usually children innocently see their parents in a positive light—most children just assume their parents are wise enough and responsible enough to have saved and invested enough money to retire one day when they are old enough to even think about such things.

It is really important for all parents to know that money should be discussed with kids from a very early age. Kids have to know that money should be treated with respect and that it has a purpose in the world. You should always be teaching your kids to separate their money in three main ways: for giving to charity, for investing to build their financial future wealth, and for spending to enjoy their life. They need to learn to prioritize what they spend their money on and you can teach them. I often explained to my kids how the spending habits of our family directly affected our lives and the ability to retire one day.

Teaching about finances needs to be balanced in everyone’s life. Sure money is important and responsible behavior with money is required. But money and your spending habits does directly impact how much time your kids get to spend with you. The higher the “altitude” of your lifestyle, the more time you will probably need to spend focused on making money and less time for your family activities. There are just so many hours in a day.

What You Need to Tell Them

If you have kids who are not yet fully weaned off your bank accounts, then it’s simple. Tell your kids that you have been looking at your retirement planning and you are pretty far behind. Explain that it is causing you stress and that it is important that going forward you need to reduce some of your expenses to invest more aggressively towards your retirement. Tell them you would appreciate it if they began picking up some of their own expenses from now on. It doesn’t mean you won’t be taking them out for lunch anymore, it just means there shouldn’t be an expectation for you to always pay the bill.

I promise you that your kids will have a natural instinct to protect your interests and understand that this is not a personal gripe but a call for responsibility and planning on your side, which they will only respect.

Final Thoughts

You will probably feel like you are not looking after your kids when they start paying for themselves, but that is nonsense. You should never begrudge your kids the need to learn to stand on their own two feet. The truth is that if you are not able to fully fund your own expenses and retirement then this will become your kid’s future financial problem one day. It really is in their best interest to give you an opportunity to build a sustainable financial future for yourself.

Do you have adult children who have not yet flown the nest? Even worse, have they gone and then returned to your home and now you just have no idea what is going to happen? Do you feel that you are suffering with your own finances because of a burden you didn’t expect at this time of your life?

Related Post
How to React When Your Adult Child Asks for Help

About Gary Weiner @ Super Saving Tips

Over the last 45 years I've worked in retail (department stores and supermarkets) and financial planning. In addition, I am a shopper, born and bred, who enjoys the challenges of finding the best items for the best prices. When I'm not busy saving money or writing here at Super Saving Tips, I enjoy baseball, music, and classic movies. I am retired and live in New Jersey with my wife.
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14 Comments

  1. My parents paid my rent while I was in college, while I took everything else out of my self-saved college fund. It was helpful — especially while I was in the dorm where part of the rent was a food stipend — without making me utterly dependent on them.

    I do think it’s dangerous to take care of too much. For example, car payments and insurance seem pretty far beyond reasonable unless your adult child is doing everything right financially, still can’t cover the cost *and* can’t get to work via public transportation. If all three of those factors aren’t met, I feel like that’s just straight-up coddling. Then again, I’m not a parent so it’s easier for me to draw lines, I suppose.

    • No doubt, Abigail, that many families struggle with decisions about this subject. My own experience was that I did get help from my parents to attend college, but I knew that I would be paying back any loans or expenses when I was able to do so after I graduated. In fact, I made that a priority. Unfortunately, since my days as a student, the situation has changed in many ways. That’s what makes this subject such a difficult one to deal with. Thanks for sharing.

  2. An interesting topic. All about having proper boundaries in place. I technically do have two adult children living at home now that my son and daughter are eighteen. We have tried to make sure they have been aware of what things cost, how much we make, what we are saving etc over the years so as they have gotten older and have taken on more financial responsibility there have been no surprises. I would certainly do all that I could to help my three children, but not at the cost of my own future. The phrase “tough love” comes to mind. I do not want to enable them to continue to make poor financial decisions. I want my three children to be able to stand on their own feet, as tough as they may be. I would much rather gift them money if I have it than loan them money too. We both don’t need the repayment of the loan to come between our relationship.

  3. You’re very wise, Gary. I’d like to think I would establish good boundaries as a parent but we have no children. I also think there’s a difference between, say, covering health insurance for an adult child in his or her 20s, than it is for covering his or her car payment — especially for an expensive car that was the wrong choice to begin with.

    • Thank you, Mrs. Groovy. Sometimes my wisdom comes from life learning experiences. It is a difficult problem when it involves your own children and the overwhelming desire to protect and help them. Covering their health insurance if they can’t is essential. Pretty much everything else is an option. But I really do believe that just like birds do, you have to let the fledglings fly at some point and in the end, they become solid citizens from it.

  4. “But when a parent provides too much financial assistance to their adult children, it is a disservice in the long term and can come at a hefty price.”

    Very true.

    Our daughter graduates college in a couple of months. We’ve told her she’s on her own after graduation. Of course if needed we’ll help with a few items for a little while. She doesn’t know this though, so she’s motivated.

    Knowing (whether correct or not) that she’s 100% on her own in a few months has encouraged her to create a draft budget and collect all bills that we pay for her now. She has a complete picture of what her expenses will look like to live fully on her own. Young adults that know they have an easy lifeline are less motivated to get their personal finances in order.

    Now, if she needs to take a couple extra months while getting some final things together, we’ll help a bit. Only on a few “essentials” that we cover now though – cell phone, health insurance, and car insurance being the big ones.

    • Brad, you sound like you have put a lot of thought into this and have set the stage for success for both your future and your daughter’s. What your daughter has already started to do shows that she is preparing herself to take responsibility and of course, just between you and me, you will have a safety net in your back pocket for anything that is unforeseen. Good job!

  5. Thanks for addressing this important topic, Gary.

    I really hope this is not a problem we have in the future. I have watched both my dad and my in laws struggle with this. Though it hasn’t affected their retirement (dad doesn’t want to retire, my inlaws were very frugal), they won’t always be there to support their overly dependent adults. My brother and Jon and I have no intention of stepping in when they’re gone, and those overly dependent adults are going to struggle.

    Little Bit is quite capable of saving right now, and understands about money and choices. That’s great, but it’s a 7 year old’s understanding. And since Jon and I are both semi-retired, I’m not sure what messages we are sending to her about work and career. We both worked really hard before she was born and put in lots of hours, and that allows us to do what we do now. But she didn’t watch it.

    • Emily, from what you have shared, I’m sure that you are teaching Little Bit about money and its importance. But even more significantly, the opportunity that she has in being a part of a balanced lifestyle that places emphasis on family and independence is something you are showing her as well. The post may stress financial responsibility but it should not be thought of as the only thing we need to give to our children. When she’s older, you can share your work experience and how and why you were able to make the choices that you did.

  6. “You may wind up putting a bandage on your child’s problems with money and by doing so risk your financial security.” Not only do parents of adult children risk their own financial security; they risk their children’s too. I know this from experience. As a teenager, I would whine for an advance on my allowance before the end of the month – because I’d spent everything. And my parents always caved. This did not serve me well, and I had my debt-ridden reckoning later in life. With our own children, we draw the line more clearly, but I still have a more, “Awwww… Let’s help them out this time,” inclination. My husband does not. I’m glad I have him to balance me out. Our kids are benefiting from the boundaries we set (and that he maintains).

    • I really appreciate your sharing your experience both as a child and now as an adult. It’s sometimes difficult to learn lessons the hard way, but the important thing is to progress forward and you’re doing that, with the help of your husband. So keep up that good work and thank you for your comment.

  7. I worry about this constantly. I moved back home with my parents, not out of financial necessity but because it is what is expected (accepted?) in my family. I wrote a long, winding post about it. There were obvious financial benefits, too. But I did pay my own insurance, etc. Still free rent is significant. Now, we are fighting a similar battle. Both of our moms care for HP. One mom accepts money (still less than what we would pay for daycare), one does not. It’s hard not to feel like I am taking advantage of them, but I’m also not sure what to do. We pushed daycare and there were so many tears and hurt feelings. Most of my friends and coworkers are terribly jealous. A few think we should distance ourselves so we don’t have to care for our parents in their twilight years (this makes me cringe). All this to say that sometimes familial expectation and tradition complicate things even more so!

    • I think there is a difference between everyone being on board with their children moving in with them and being in a position where the parents don’t have a choice in the matter and suffer. Throughout history, families stayed and lived together, so the phenomenon of being 18 and leaving home in that context is relatively new. Sometimes circumstances dictate a situation, but ultimately we have to be able to support ourselves and that’s when the hard decisions are made.

      As for your current situation, grandparents often compete for the attention of their grandchildren. If you’ve offered compensation to each of them and they’re ok with it or without it, then I would not feel any guilt. Thanks for sharing your experiences, Penny.

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