Parents helping their adult children financially can be welcome and needed, but certain dynamics could lead to "enabling" or "coddling," with bad money habits signaling a need to cut the cord.
When it comes to ensuring one's kids are fiscally responsible adults, Washington Post columnist Michelle Singletary says there is a "fine line" between helping and "hindering" sons and daughters when aiding them financially.
According to the Pew Research Center, about a third of young adults between 18 and 34 still live with their parents. Sixty-four percent of those young adults say this arrangement has had a "positive impact" on their financial situation.
Furthermore, 69% of young adults surveyed said they like the level of parental involvement in their day-to-day lives, while 22% said they would like their parents to be more involved. Surprisingly, only 9% admitted their parents were overly involved.
Certified financial therapist Traci S. Williams told Singletary that "financial enabling" can occur when a parent has trouble saying no to their loved ones when they ask for money, especially if the individual can look after themselves.
To avoid this, Williams said families should establish "house rules," assign financial responsibilities, outline roles within the family and have check-ins to ensure people follow through.
Singletary also offered her perspective on "enabling" young adults by giving them money.
She noted that having a "SMART goal or goals" is paramount, a "specific, measurable, achievable, relevant and time-based plan." For example, if a son or daughter is living at home to pay off student debt, they should have a plan to pay that off and achieve financial independence.
The columnist also suggested that parents open themselves up for advice. Most young adults (68%) look to their parents for financial advice, according to Pew.
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Parents can also take the burden of some expenses away to help their kids save. For example, Singletary and her husband are not charging their children rent as long as they save money as promised.
Singletary also identified some signs of when helping a child turns into "coddling" and it is time to "cut the cord."
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She surmised that parents may be enabling if helping their adult child negatively impacts their own financial well-being or their generosity is leading to the development of bad financial habits.
"When you don’t see financial growth, that’s coddling. You are being overprotective when your adult child is eating out all the time and planning a trip to Mexico for spring break, but can’t find the money to pay for her own car insurance," Singletary said.
