Economic factors are forcing many young adults to turn to their parents for continued financial support. Just last year, 58% of 18- to 24-year olds in the U.S. lived with their parents.
As this trend continues, more parents are providing financial support that they didn’t plan for. In addition to the impact this can have on their own finances, many are unsure how to navigate support in a way that encourages independence.
How can parents help set their children up for success as adults while balancing their financial planning needs?
Discuss the “what-ifs.” What if your child loses their job? What if they need help once you’re retired? Even if you’re not supporting your child financially, consider these hypothetical scenarios and how you’d anticipate providing support.
Share your perspectives. Ask how your child is approaching financial planning. Not only do these discussions help you understand how they’re doing financially, but they also provide an opportunity to share your insights and answer questions they might not know to ask.
Outline your expectations. Setting expectations and boundaries can keep everyone on the same page and help nurture success rather than dependency. If your child moved back in, would you expect them to contribute to household expenses — and if so, how much? What kind of progress would you expect them to make in their savings or career while receiving your support?
Find a balance. Your own financial goals shouldn’t be sacrificed in the process of (potentially) providing for your child. Find a balance through discussion and planning: For example, if your child is living paycheck to paycheck, partially assisting them now could provide the lift they need to build their savings and prevent financial setbacks for both of you later on.
Financial planning can be tough in these uncertain times. Get in touch if you or your children would like expert guidance and insight along the way.