Are Your Adult Children A Financial Burden?

Are you among the parents who welcomed your adult children back into the family home during the pandemic? Or perhaps they are yet to leave the nest? You’re not alone. Adult children aged 25 to 34 living with their parents has shot up 17 per cent, according to the latest census data.

There can be good financial reasons for letting your kids linger on in the family home. But shared living arrangements could also be making it all too easy for adult children to keep turning to the bank of mum and dad for financial help. And that may not be good for them or you.

Often parents struggle with when to cut the financial cord. Is it when their kids get their first part-time job? Or full-time job? Go to university? At age 18?

How do you know when you are helping or hindering their path to financial independence? Here are five signs that it’s time to set better financial boundaries with your adult children.

1. It’s affecting your financial stability

If helping your kids with their mobile bill, car insurance, or paying for their food means a ballooning credit card balance for you, it’s time to take a different tack.

2. Your own goals are on the backburner

Lending a hand to your adult children shouldn’t come at the cost of your own financial goals. If your retirement plans are getting derailed or a new house is becoming a distant dream you are putting their financial wellbeing ahead of your own.

3. They could manage if they budgeted better

They’ve got a steady income and they should have no problem paying their bills, yet they are coming to you for a hand-out.

4. You’re constantly bailing them out of avoidable situations

They are making a habit of asking for help just before payday or when the unexpected happens such as their car breaks down.

5. Your child’s money management skills are getting worse

They are asking you (or others) for help more frequently and are constantly fighting financial fires.

Here are some suggestions for setting better boundaries.

• Have a conversation with them about money and let them know you are going to be cutting or reducing the financial support.

• Tally up the bills you have been covering and share it with them.

• Set a timeline with exact dates for reducing your support them. For instance, next month you pay their mobile bill, in three months they will need to cover their own car insurance, and in six months find their own place to live.

• Suggest they seek help with budgeting or putting a financial plan in place or finding a job/higher-paying job. Offer them help that builds their financial independence.

• Tell them how it will benefit them: they will learn to be financially independent and have a sense of achievement and empowerment around money.

Maybe your adult kids are not expecting last-minute bailouts, but you can still set good financial boundaries by asking them to pay rent and a share of expenses including groceries.