How to make your adult children financially independent before they send you broke.
As a parent, you always want the best for your children, no matter their age. But what happens when supporting your adult children is jeopardizing your financial future? Many parents find themselves in this difficult position, providing financial help to grown children who have yet to fully stand on their own feet. If this sounds familiar, it’s important to set boundaries and take steps to encourage financial independence—before your generosity leads you toward financial strain.
Why It’s a Problem
Many parents continue to offer help well into their children’s adult years, covering everything from rent and bills to significant life purchases. While the desire to help is understandable, this can sometimes backfire, particularly if the financial support stretches on indefinitely. For parents approaching or already in retirement, the cost of supporting adult children can significantly erode their savings, forcing them to dip into funds intended to secure their own future.
In fact, a study by Finder found that 45% of Australians aged 55 and over are worried they will outlive their savings. And contributing to your adult children’s living expenses only accelerates that risk.
Encouraging Financial Independence
So, how do you help your children become financially independent? Here are some actionable steps:
- Have Honest Conversations
The first step is having an open and honest conversation with your children about your own financial situation. Explain that your support has limits and share your concerns about how continuing to provide financial assistance might affect your retirement or long-term financial goals. This conversation can be difficult, but it’s essential in setting realistic expectations and encouraging them to take responsibility.
- Teach Them Financial Skills
Sometimes, adult children lean on their parents because they lack essential financial skills. Whether it’s creating a budget (or “money plan”), managing bills, or saving for the future, many young adults simply haven’t had the financial education needed to stand on their own. Encourage them to develop a money mindset that will serve them well over the long term. There are a wealth of resources available online, including superannuation websites, government financial literacy tools like Moneysmart (moneysmart.gov.au), and my own Designing Your Dream Life mini-course, which helps people develop good financial habits. You can find it at vanessastoykov.podia.com/dream-life-mini-course.
- Stop the Bank of Mum and Dad
While it’s tempting to keep bailing your children out, continuing to do so can prevent them from learning important life lessons. Instead of offering cash, help them learn how to problem-solve. If they need help with rent, for instance, suggest they take on more hours at work, find a roommate, or consider relocating to a more affordable area. Cutting off the “Bank of Mum and Dad” might feel harsh, but it’s often the tough love required to help your children thrive independently.
- Set Boundaries and Stick to Them
It’s crucial to establish clear boundaries and make it known what kind of support—if any—you’re willing to offer. Whether it’s helping with one-off emergencies or agreeing to contribute for a fixed period, set limits and ensure your children understand these are non-negotiable. This will help them realize that they can’t rely on you indefinitely.
- Provide a Safety Net, Not a Crutch
While you’re working toward making your children financially independent, it’s okay to offer a safety net when necessary. Life’s challenges can throw anyone off course, and it’s natural to want to offer a helping hand when genuine emergencies arise. But ensure that your support is short-term and tied to specific conditions—whether it’s finding a job, paying off debt, or saving for a particular goal.
Planning for Your Own Financial Security
As much as you love your children, your own financial security must come first—especially as you approach retirement. Prioritizing your savings, superannuation, and investments ensures that you’ll be able to live comfortably in the years ahead without needing to rely on others for support.
If your children are still leaning on you financially, now is the time to act. Setting boundaries and encouraging independence will benefit both you and your children in the long run.
By taking these steps, you can help your children become financially independent while ensuring that your own financial future remains secure.
Help further prepare your children with our comprehensive guide to Explain Compound Interest to Your Kids. And when planning your inheritance, make sure to consider the Top 3 Things to Know When Leaving Your Kids an Early Inheritance.
