It is a perfectly natural thing for a parent to want the best for their child. That doesn't change once your child is an adult. A parent may still feel the need to help their child pay for certain expenses. They may pay a portion of the child’s rent so that the child can live in a safer neighborhood or pay for other expenses. Eventually, parents will wonder, when is the right time to stop paying your child's bills?
Fidelity surveyed millennials, between the ages of 25 and 35, and found some startling conclusions. In the survey, 47% of millennials admitted that their parents have helped them to pay some of their expenses since they began living on their own. The expenses most often paid by parents included; cellphone bills at 21%, groceries at 20%, clothing at 16%, utilities and entertainment at 14% each, and rent or mortgage payments at 12%.
What does this means for the children and their parents? According to the Federal Reserve, half of all Americans have less than $400 in savings, while the millennials surveyed averaged $9,100 in savings, far above the national average. More than half of the millennials have investment accounts and retirement savings as well, meaning they are financially preparing for the future. This is a very good thing for millennials, who are years ahead of previous generations when it comes to financial preparation. However, we need to consider how this is affecting the parents who are supporting their adult children. One may ask, are these parents sacrificing their own financial wellness in order to help their adult children prosper? Do the parents have enough money in their own savings and retirement accounts to retire without worry?
Parents who are supporting adult children should take an honest look at where they will stand when it comes to retirement. Some parents may be well-prepared and are not risking their financial wellness to help their child. However, since half of adults have less than $400 in savings, it is likely that parents may be harming their own finances by continuing to pay a child's expenses.
Parents who decide that they need to use the funds toward their own financial planning need to have an honest talk with their child. Chances are, if your child has $9,100 in savings, they can afford to pay their own bills. At that point, a child is ready to take on the full responsibility of their own finances. They may struggle to adjust at first, but they have been saving money to cover unexpected expenses that may arise.
If your child has their own steady income, it is time to discuss their financial situation. If a grown child has concerns about taking on the full financial responsibility for all of their bills, sit down with them and discuss their finances and help them to figure out the difference between needs and luxuries. Parents should not risk their own financial health when their children are capable of supporting themselves.