It’s a question that every parent needs to ask: When should I stop giving my kid money?
Do you stop paying for extras, and even not-so extras like clothes, the moment they start college? The moment they finish college? Or maybe you’re done once they have a full-time job with benefits? Or just any ol’ job after college? Or perhaps the moment they get some part-time fast food gig in high school you stop giving them the green stuff, other than room and board? Depending how you feel about kids and their independence, you could probably make a pretty persuasive argument for any of those scenarios.
Obviously, everybody’s financial situation is different, and there’s probably no right or wrong answer. Which may be both unsettling and comforting. But there probably is a good and bad way to go about giving your teenagers and then young adults money. So as you try to figure out when to stop or slow down on being the Bank of Mom or Dad, here are some questions to ask yourself.
Do I want my kid working at a job throughout college?
Often, colleges recommend that students work no more than 10 to 15 hours a week. And there’s a good reason for that: Many will advise students to plan on spending two hours of studying per one hour of classroom instruction. So if your kid has 12 hours a week of college courses, he or she should be studying 24 hours a week, which means that for 36 hours a week, your kid’s brain should be engaged in academics. The ideal situation, of course, is having your kid either earning a little part-time money or not working at all. In which case, either way, you probably will be subsidizing your kid’s lifestyle to some extent for several more years.
Assuming you and your kid think that’s reasonable, “you will need to contribute almost all of the same financial amount as when he was living at home,” says Daniel Hill, a certified financial planner and president of the Richmond, Virginia-based firm D.R. Hill Wealth Strategies. “While your grocery bill may decrease, if your child is utilizing the school’s meal plan, other incidentals such as clothes, school supplies and basic entertainment will be needed.”
The key is to be helpful but not to enable poor behavior. Jenny Grant Rankin
Is your teenager or young adult working hard, or hardly working?
That’s an important consideration, says Jenny Grant Rankin, a former teacher and the author of numerous books on education and burnout, among other topics. She lives in Laguna Beach, California, and has six children, ranging from 9 to 36 years old.
“If a parent can afford to support a child during college years, such as by covering tuition and living expenses, this allows the adult kid to focus on, and thus perform well, in school,” Rankin says. In other words, she sees that as perfectly fine ― as many parents would ― and as an investment in your kids.
“However, if a child is partying her nights away or not applying himself to his studies, parents would be well-advised to pull financial support after a warning period where the kid has a chance to turn things around,” Rankin says. “The key is to be helpful but not to enable poor behavior.”
So that’s something to think about, even post-college. If your kid is working hard to make their dreams come true, and you can help, and your child is grateful and putting your money to good use, it may make sense to you to keep helping out. In which case, do it and don’t feel bad about it. But if your adult kid isn’t doing much with their life, and your money is propping them up, your financial assistance may well be doing more harm than good.
On the other hand, if your adult child isn’t motivated to work or study, there may be something deeper going on, says Shadeiyah Edwards, a clinical and forensic psychologist in Redondo Beach, California. She suggests seeking professional help before cutting your kids off.
But ultimately, Edwards, who is also a parent and a parenting coach, suggests that you become less of a bank gradually, like having your kids pay small bills once they start working a part-time job. “The goal is to raise children to become independent adults,” she says.
Are you teaching anything to your kid when you give them money? Or just giving money away?
Howard Dvorkin, a serial entrepreneur and chairman of Debt.com, a consumer education website, says, “I believe that less focus should be placed on when to stop giving your kids money, but rather ‘how.’ There’s no problem supporting your adult children for years after college, once done right through constant teachable moments. When giving adult kids your money, it’s crucial to enforce conditions such as creating a budget ― and sticking to it ― setting up repayment plans once financial situations change, or even investing some in a retirement fund.”
He says, “It doesn’t matter how long you support your kids. What matters is that you treat them like adults. If you throw money at them, they learn nothing. But if you make them sign a contract for the money, they learn how leases, mortgages and loan agreements work. Don’t stop being a parent just because your child graduated. Whatever amount of money you give them, make them earn it.”
Giving children money into their adult life without conditions is a horrible idea. Byron Tully
Have you given your kid ample warning that you are going to cut off, or cut back, the money supply?
This may be the most important question you can ask yourself.
“Cutting your kids off should not be punitive or abrupt. … It’s a good idea to give the child a heads up about what is on the horizon,” says Byron Tully, author of The Old Money Book and a speaker who specializes in writing and talking to families who have wealth and privilege for three generations or more.
But his advice seems pretty good for any family, no matter how full or empty the bank account. If you don’t warn your kid you’re cutting them off, and offer a decent amount of advance warning, it can be a little like a slumlord evicting a blindsided tenant.
Whatever you do with your money, though, once your teen is a 20-something college graduate, Tully recommends offering money sensibly and with conditions. For instance, if your college graduate can’t find a job, he says, “I’d suggest letting a child live at home and save money rather than giving them money to pay the rent for an apartment. They’ll want to be independent faster ― and get out of the house ― as they find their feet.”
And as the years ago on, you want to be even more careful. For instance, if you’re going to give your adult kid money, it should be a loan ― and probably with interest or some sort of timetable and agreement that you’ll get your money back in a reasonable time frame.
“The only hard and fast rule I can say is that giving children money into their adult life without conditions is a horrible idea,” Tully says. “It robs the child of self-reliance, dulls their search for meaning and cripples self-esteem.”
Laura Davis, a financial planner in Decatur, Georgia, who works with Cuthbert Financial Guidance, says that “in our practice, we have seen more instances where helping adult children financially after college harms rather than helps them.”
She points out, “If you have no fear of failure as an adult, you will not be able to realize your full potential personally or professionally. Parents think that they are doing their kids a favor by continuing to support them financially as adults, but the biggest gift you can give your kids is a great foundation of personal responsibility and then let them find their own way. Of course there are exceptions, but generally, in my opinion, the day your child graduates from college is the day you should cut the purse strings.”
Maybe, maybe not. But while your kid never stops being your kid, your child does eventually become an adult. And at some point, enough becomes enough. Maybe it’s that moment when financial transactions make neither you nor your kid feel like a champ, but more of a chump.
- This article originally appeared on HuffPost.