Is it a good idea for parents to financially support adult children?

Setting limits is important as it can affect savings and retirement planning if you are not financially secure

While some parents offer financial support to their adult children because they want to, others feel obligated even if it is financially inconvenient. Getty

Some parents will tell you first-hand there is no expiration date on this raising children gig.

For some, that means they extend financial help to their children into adulthood. When I was 21 and got into a master’s programme at a college of my dreams, my mother swooped in to help me pay for my degree.

Many parents have been kind enough to do this and more. When I say “many”, I’m backed up by a 2023 survey from Savings.com that found 45 per cent of parents with a child 18 or older spend an average of more than $1,400 a month supporting their children financially, excluding adult children with disabilities.

But is this financial support always a good idea?

Why parents support adult children

There are many reasons a parent may choose to support their adult children.

Disabilities and wanting to help them achieve major life milestones are a couple. Shelmeshia Hill-Brown, chief executive of Wholistic Resolutions in Chesapeake, Virginia, is a social worker and therapist who works with parents who financially support their adult children.

A major theme she sees is parents helping to pay for school, especially since the Covid-19 pandemic. Buying a home and exploring infertility treatments are other reasons her clients financially support their children.

While some parents offer financial support because they want to, others feel obligated even when it is financially inconvenient. Sometimes, the obligation stems from guilt of not preparing their children for financial independence early on, Ms Hill-Brown says.

“They didn’t do that one-on-one time with them, to sit down and actually teach them,” she says.

“But a lot of that also stemmed from, it never being done with them, as well, so they were learning along the way and it made it a little bit more challenging to sit down and come up with a plan to implement with their own children.”

Risks of supporting adult children

Supporting your children can be satisfying, but it also may be detrimental if you are not financially secure.

It also can affect retirement savings, which many Americans already have concerns about. Fidelity’s 2023 Retirement Savings Assessment tells us that 52 per cent of American households may not be able to cover essential expenses in retirement. And roughly 50 per cent even plan to work during retirement.

Nonetheless, some parents think about dipping into their savings so their adult children do not have to take out loans, says Kayla Walter, a certified financial planner at Bailey Wealth Advisers in Maryland. She advises clients against that as there are student loans but no loans for retirement.

“You’re blowing through your savings at a much faster rate and it’s not going to last you as long as, maybe, you intend to live,” she says.

Protecting your finances and relationship

The risk in providing for adult children is twofold – it can affect your finances and relationship. Yes, it may give you a sense of purpose and make you feel connected to your child, but it also can cause resentment, says Ms Hill-Brown.

“There are some [parents] who actually find themselves in a financial bind because they were not open with their own financial responsibilities and how it would be impacted,” she says.

“And that’s where that resentment and guilt takes place as a result.”

Resentment can happen even for parents who can afford to support their children, she says.

To protect your finances, make sure you can afford to extend help to your children before saying yes, and know your limits.

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You can then communicate these limits with your child. For those who have children who are financially dependent on them, gradually reduce support and set boundaries around how financial support will look moving forward, Ms Hill-Brown says. Also, be willing to say no when necessary.

If you are feeling guilty about it, keep in mind that financial support without limits could keep your child from becoming financially independent, which is something Ms Hill-Brown says they could then pass on to the next generation.

Encouraging financial independence

After setting those financial boundaries, you can start steering your child towards financial independence.

One way to help do this is by bringing them into your finances, Ms Walter says.

“If they’re feeling like they didn’t do enough for their children, a good time to kind of help them learn more about finances would be bringing them into the meeting with your adviser and make it a family meeting so that way they can see what’s going on,” she says.

Another option is to point adult children to financial services that can help. For instance, instead of loaning them money if they are in serious debt, you could direct them to a debt consolidation service.

Finally, Ms Walter suggests being a good example to your children and mirroring healthy money habits.

“There’s never not a good time to set a good financial example for your children.”