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Tips for Helping Adult Children Become Financially Independent

College graduation season is now upon us and the class of 2021 will soon begin their life post-college; potentially including entry-level salaries, payments for first- and last-month’s rent with a security deposit and taking on expenses like a new car. As children transition into adulthood, parents naturally want to continue supporting them both emotionally and financially, thus it can be difficult to wean adult children off your bank account.


If you’re financially helping your kids into adulthood, you’re not alone. A 2018 Pew Research Study found that only 24 percent of young adults were financially independent by age 22 or younger, compared to 32 percent in 1980.  Unfortunately, parental financial support is both a hindrance to an adult child’s ability to become fully self-sufficient and it can diminish parents’ retirement savings. 


Given the time of year, Charter Oak’s advisors wanted to share the following suggestions for supporting your adult child’s transition to financial independence post-college and beyond.


#1. Be Transparent in Your Communication


When first letting your children know that you will no longer pay their phone bill, help out with groceries, or give them a hefty amount of Christmas cash, make sure to clearly explain why. This is not about your lack of care or love for them, rather it is for their long-term benefit and ability to provide for themselves long after you’re gone – an ultimate act of love. 


Let them know that it may affect your ability to retire comfortably and to cover your own expenses in the future. By appealing to their compassion and treating them as fellow adults, you can actually give your children a sense of empowerment.


#2. Give Them an Adequate Timeline 


If your children are used to a monthly check, phone support, or even one-off amounts of money when in need, it can be a shock to immediately cut off their financial supply. Giving them time to organize their finances and emotionally prepare to fully support themselves is one way to lead them towards successful financial independence. 


In addition, giving children a timeline creates an objective boundary that might be hard to set otherwise. If you wait until you think your child can handle it, or until you feel “ready,” the time may never come. Choosing a date and sticking to it puts the decision in stone and makes it easier to follow through.


#3. Provide the Tools to Succeed


Educating your adult children on best practices for managing their money can increase their confidence while giving them the means to budget, spend and save properly. You can give them advice on your own or point them towards a financial planner. If they meet with a Charter Oak advisor, we can explain (with your permission) how your financial support can be detrimental to your retirement and well-being, which can give your children even more clarity on the situation.


Plus, having an objective perspective can take the emotion out of the decision, making it more of a logical next step. A financial planner can also assist your children in organizing their finances and give them a head start on becoming financially literate.


#4. Prepare to Still Feel Responsible


As you put an end to financially supporting your children, you may still feel twinges of desire to help them out. The first step towards dealing with these emotions is to expect them to come up and to prepare yourself to avoid reacting. Even if your adult child is struggling to afford certain expenses, this difficulty often leads to growth on their end. When your children are faced with financial realities, it will likely motivate them to prepare, save and budget more diligently. 


“In the heart of every struggle lies

an opportunity to grow.” 


– Melanie Koulouris


We at Charter Oak understand that putting an end to financially supporting your adult children is not easy, especially given the state of our world and with regard to any current financial hardships


However, we believe it is important to ease your adult children into independence and prepare them to effectively manage their own money – in order to move toward an even healthier financial future as well as a stronger and more connected relationship with them. As always, it is our pleasure to serve you and we welcome your further questions on this topic.