Paying bills for adult children? Try tough love instead

[REWahoo]

When I read this article, Paying bills for adult children? Try tough love instead, I immediately thought of this thread: http://www.early-retirement.org/forums/f26/a-question-about-my-sister-72738.html

The author has some excellent advice for what he claims are the 85% of parents who "plan to provide some sort of postgraduation financial assistance." Don't do it, he says as this help will likely hurt their chances for independence and success.

...what can parents do to make “home” a lot less welcoming, and make complete financial independence look like the brass ring it should be? Turns out, quite a bit.

Be honest with yourself. Ask yourself: Is my financial assistance helping or hindering my child's emotional and financial growth?

...Most parents don't want their children to struggle like they may have as young adults. But balance that pull with the understanding that those struggles—and successes—are critical if your child is to emerge an independent adult with a solid self-image.

Mom and Dad must be on the same page. One parent slipping the son or daughter money while the other fumes does little for a marriage or the emotional and financial well-being of the child.

Be a parent and a coach. Offer emotional support and financial mentoring. Saying “no” to financial assistance does not mean you can't help with budgeting, résumé writing, professional networking, interview preparation—heck, whatever it takes!

Bottom line:

Retiring rich is hard enough without paying for your child's extended adolescence. The job market may be tough for new graduates, but forcing your child to navigate it anyway might just be the best way to help.

 

[Greencheese]

I disagree, I think that reasonable assistance during the debt elimination phase can be useful. Keeping a child on the family cell phone plan may only cost you $20 but saves the child something like $75 for their own phone (assuming Verizon Smartphone) for example.

If they're using all that extra cash flow to pay down any debt then I think its ok to help them out financially. Only when there is either no debt or they are making bad decisions is this 100% a tough love situation.

 

[skyvue]

My daughter just graduated from high school and is headed for college in a few weeks. I am struggling with how much to "help" her with her miscellaneous expenses such as cell phone, auto insurance, gasoline, etc.... I am pretty generous with cash gifts for her birthday, Christmas, report cards, etc.. which she parlays into most of the clothes and gadgets she "wants" (not needs). She has money in the bank and is never "broke" as she has a pretty lucrative baby sitting gig, but she wants me to pay for the things I have always paid for and want her cash to be for "fun things"! LOL

She did get a scholarship to cover her tuition and provide a stipend for school. I will be paying for room & board, books, etc.... I would prefer her to not have to work at school the first year because she is in a demanding major (Engineering). If we do that, then I probably need to provide her with a small allowance for miscellaneous spending money at college?

 

[REWahoo]

I disagree, I think that reasonable assistance during the debt elimination phase can be useful.

Everyone has their own philosophy of parenting.

We chose to focus our financial help on their college years and prevent the need for a 'debt elimination phase' once they graduated. That avoided a lot of parental guilt and made it relatively easy for us to take the tough love route post graduation.

 

[REWahoo]

If we do that, then I probably need to provide her with a small allowance for miscellaneous spending money at college?

I agree.

If you haven't already done so, this is a perfect time to sit down with her and help her come up with a spending budget. That way both she and you have a clear understanding of her expected income and expenditures.

 

[Andre1969]

It can be a balancing act, sometimes. For example, my Grandmom and Granddad always babied my uncle, much to my Mom's annoyance. Of course, Mom tends to conveniently forget that they helped her over the years. Funny how one-sided memory can be.

My uncle moved back in with Grandmom around Christmas of 1992. Granddad had passed away in 1990, and I was living there as well, while I was in college. I'm sure a lot of family members, as well as others, looked at it as him (maybe me too) as sponging off of her. But, she was getting older by that time, turning 69 soon thereafter. She could still drive, and in fact kept working until she turned 70. But she wouldn't have been able to keep up with yard work, home repairs, etc...stuff my uncle could do.

Fast forward to today, and my uncle is still living there, rent free as always. But, Grandmom is now 90, has macular degeneration, and is slowly withering away. There is no way she would be able to live there, on her own. One "I've fallen and I can't get up" moment, and she would be done. Between my uncle living with her, and me living across the street, she's never alone more than a few hours. Sure, something bad could still happen, but it still beats the alternatives. One of her old lady friends, a few years ago, fell down and couldn't get up. She had one of those medic alert things, but somehow couldn't activate it. She ended up going several days with no assistance. Even worse, she hadn't turned the air conditioning on yet, and it got hot. She had a horde of dogs, chihuahuas and miniature pinschers, that suffered with her. I forget who ended up finding her, whether a relative stopped by, or she finally got that medic alert thing to work. She survived, thankfully. Sadly, some of the mini-pins did not. She ended up living about 5 more years, and was into her 90's when she finally passed. But that incident had to be a nightmare to go through.

So, I guess sometimes having the kids be too dependent on you can work out, in the long run. But, who knows? My uncle might still have done the same thing, even if my grandparents had been more tough-love with him. It may just depend on the kid, moreso than the financial assistance.

 

[MichaelB]

It's not easy to know where to draw the line. My kids are in their 30's and I still don't know. Debt free college grad was a priority for us as well, I see it as an enabler, not a spoiler.

For me the key is their learning how to make choices and then live with the consequences. If our help gets in the way of that, it needs to have some other important advantage.

Two things in the article worth their weight in gold: both parents need to be on the same page, and a parent needs to be a coach.

 

[NW-Bound]

Parenting is hard. My two children are different, although they grew up under the same roof and were treated equally. My son is a conservative spender, and my wife often worries that he might become a tight wad and not know to be generous when he should.

On the other hand, my daughter was a big spender and blew money on little dumb things that added up. She is getting better though, as her fiancé is an engineer and he is financially conservative as most engineers I know.

Now that they are both earning a decent living, I think they have matured enough to appreciate the fact that we helped them get through school without any debt, so that they could enjoy the good life right after they started working. I also made it clear that they should not expect any bailout from us if they mess up.

Of course they do not know that it is likely that when we croak, we will leave enough behind to turn them into millionaires overnight. However, I want to see them become millionaires on their own.

 

[RetireAge50]

I'm hoping for the perfect transition. I'll pay through college and then they will have plenty of their own money to begin the next part of their lives.

 

[Koolau]

I feel blessed that our kids were very motivated to be independent and to make their own way. I think we raised them that way, but I don't discount genes. The kids did their college stent and then made lives for themselves. DW and I have felt that we would much rather leave our kids an inheritance NOW than when we die. So the will is pretty skimpy for the kids but we have helped them with their house down payments and helped fund there ROTHs, for instance. As needs arise, we will consider other gifts to them. We have already decided what the total outlay will be, so there will be a limit. It's not open ended. We've more or less shared with the kids not to expect much when we are gone. We'll spend it while we live or give most to our favorite charities (and they don't include our kids!) We're all different, so YMMV.

 

[NW-Bound]

... we have helped them with their house down payments and helped fund there ROTHs, for instance. As needs arise, we will consider other gifts to them...

I helped my daughter with a 20% down payment on her home because the opportunity to buy it at 40% of the last purchase price would be gone by the time she saved up enough money. I hope she learns to appreciate the fact that one can only take advantage of good deals if he is liquid. I will help my son the same way when he's ready for home ownership.

As to funding their Roth, it's a good way to give their inheritance early, but I have not thought much about that. I need to be sure that this bull market won't turn around and gore me, like the photos I have posted in another thread.

 

[Lancelot]

Do the kids have no pride? Or are the parents refusing to allow the kids to mature, keeping them dependent for selfish reasons.

Let kids mature and lead their own lives, parents can take pride in that...

 

[imoldernu]

Our decision was made many, many years ago after a serious sit-down with our four sons, who are now in their late 40's and 50's. It was an agreement that was settled once, and never again discussed.

Except for extraordinary health situations, they have agreed to not asking for assistance from us... understanding our frugality, seeing our legal will, and agreeing with the equal distribution with whatever will be left. At the same time, our own independence and provisions for the future, gives them the comfort of knowing they should not have to adjust their own lives to care for us in our dotage... no small concern.

It helps that our family is so close, that there has never been serious disagreement between any of us since they were in their early teens. They all still talk to each other almost every day, though they live hundreds of miles apart, and support each other when needed.

With a little luck, though we won't make them millionaires, the leftovers should supplement their own retirement, and mean more than than the few thousand dollars for a car or vacation in the earlier periods of their lives. While we did help in paying for part of their education, they worked hard throughout their college years.

Not tough love, but we're proud of their independence and the fact that they are in charge of their lives and their families. None our family will ever be really wealthy, but that has never been a part of our dreams. I'll settle for being happy and feeling the love that we share.

 

[travelover]

Do the kids have no pride? Or are the parents refusing to allow the kids to mature, keeping them dependent for selfish reasons.

Let kids mature and lead their own lives, parents can take pride in that...

I'm in agreement. I totally bootstrapped myself, putting myself through college and never felt deprived. When I see people dumping money on their kids long after adulthood, I think they are trading cash for unending control of their kid's lives. Present company excepted, of course.


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[Mulligan]

Everyone has their own philosophy of parenting.

We chose to focus our financial help on their college years and prevent the need for a 'debt elimination phase' once they graduated. That avoided a lot of parental guilt and made it relatively easy for us to take the tough love route post graduation.

Well my offspring just got a little financial kick in the pants. I told her last year I overfunded her 529 by about $3k and she would be able then to use it for her masters when she decided to pursue it. Well this summer she proceeds to enroll in a summer class and then decide not to take it. I noticed the bill on her account and told her to drop that class so we aren't charged for it. I then also texted her mother to remind her which she did. Well come a month later, lazy bones never got around to doing it. Her mother ratted her out by telling me she said "dad had extra money in my 529 so it's not a big deal". Well, she thought wrong. I paid that wasted expense, but I'm draining the rest of the account and spending it on myself. I don't care it the penalty fees take 80% of it. While she is a good girl that cavalier attitude towards others people money combined with slothfulness deserves a financial hit!


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[NW-Bound]

Wow! That wasteful attitude would drive me ballistic too.

When I read this article, Paying bills for adult children? Try tough love instead, I immediately thought of this thread: http://www.early-retirement.org/forums/f26/a-question-about-my-sister-72738.html

Back on the OP's article, I have given money to my children after they started working, but will not pay their recurrent bills.

They are having good jobs that make use of their degrees so do not need my help, but even if they have a lower pay job, they must learn to live within their means.

 

[Mulligan]

Wow! That wasteful attitude would drive me ballistic too.



Back on the OP's article, I have given money to my children after they started working, but will not pay their recurrent bills.

They are having good jobs that make use of their degrees so do not need my help, but even if they have a lower pay job, they must learn to live within their means.

A buddy of mine this summer had the same thing happen to him by his son, except it was 2 classes... He is not happy either...he had a classic line a few weeks ago...His son saw his and his wife's paychecks and says "Dad I didn't know we were rich". He replied to his son..."No, your mother and I are rich, you are not"


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[NW-Bound]

I can hear the kid moan "Dad, how can you be so cruel and not sharing?".

 

[Cobra9777]

Keeping a child on the family cell phone plan may only cost you $20 but saves the child something like $75 for their own phone

We do the same thing for our two kids (mid 20s), but they pay us the $20 per month. Same with car insurance... it's dramatically cheaper to keep them on our policy rather than getting their own. But they pay us their portion of the premium. In this way, we are helping out while they are trying to get established, but without actually paying their bills.

My daughter just graduated from high school and is headed for college in a few weeks. I am struggling with how much to "help" her with her miscellaneous expenses such as cell phone, auto insurance, gasoline, etc...

During college, we paid tuition, fees, room and board. We also paid for cell phone service and auto insurance, but that's it. We intentionally did not provide daily spending money, as a way to start educating them on money management. Our son was an engineering major at a very tough school. So rather than work during school, he worked full-time during the summer and started the school year with around $3000 in the bank. We also gave cash gifts for birthdays and Christmas, so he had a comfortable budget of around $300-400 per month for gasoline and other misc spending. He eventually learned to NOT spend it all by November. Our daughter was always able to work during school with several lucrative nanny jobs. She tends to spend a lot more, and had a less demanding major, so this worked out well for her.

I'll add this... when the kids moved off campus (which is inevitable at some point in year 2 or 3), we continued to pay for housing cost, but not food and other bills, like utilities, cable, internet, etc. They both knew this going in, and had to adapt their working hours and spending habits to make it work. It was tough, but college kids are quite inventive when strapped for cash, like going to campus gatherings where there's free BBQ.

For us, the answer was a balanced approach, both during college and after. No hard-line tough love, but no free ride either. We have friends who took one of the more extreme alternatives with their kids and it always ended badly. The balanced approach seems to have worked well for us, as both kids had the freedom to explore their dreams, finished college on time with no debt, and have a solid understanding of money management and the value of hard work.

 

[Animorph]

We paid for our kid's college education. During their college years they were responsible for spending the money we had budgeted for them, paid to them by a monthly check. Same budget as we used to have earlier, but they were responsible for it now instead of us. Both did well, and ended up saving quite a bit I think. We tried to encourage good choices by allowing them to keep the difference if they found a cheaper place to live or a small scholarship. We gave them two years of Roth contributions when they finished in four years instead of the budgeted five years. We helped with about $2500 and a loan for a car after college. They pay interest equal to our mortgage rate for that.

They are now on their own. $0 budgeted for kids, outside of our small gifts budget. We don't expect to be paying for anything else for them. Both have good jobs, which helps. But that's what college was for.

They are in with us on our Ting phone plan, where we can share minutes. They pay their share of that bill ($8.18!), and whoever goes over our base allotments shares in paying any overages.

 

[W2R]

I think it is important for parents to communicate to their kids all along what they will and will not pay for. The kids deserve to know from the earliest possible age on. Then they know what to expect, and what to prepare for as they get older.

We decided to pay tuition, books, and $500/month while our daughter was in college, and no funding at all afterwards, plus no bouncing back to live at home. She knew this nearly from birth since we made a point of expressing our opinions of various possible arrangements. She knew that she would need a part time job in college, and she knew it was just a matter of limited money and not being able to afford any more.

She never even asked us for a penny after college. To her this arrangement seemed fair. I don't think it would have been fair at all, if she had not known what to expect.

 

[scrabbler1]

My parents and I worked out an arrangement when I went away to college in the early 1980s. After the college's financial aid paid for about half of the tuition, my parents and I split 50/50 the remaining major costs - the rest of the tuition and the room & board. My share came from student loans, mostly. I was responsible for books and other day-to-day expenses. I had some savings from part-time jobs while in high school but I did get some part-time jobs in my second year of college so as not to drain those savings.

After college, I moved out upon working full-time just after graduation. But the following year (1986), I moved back home for a few months until I could find another place. I paid my parents $200 a month which was a good deal for all of us, as it did not cost them an extra $200 per month to house me and buy some food for me. I paid for all of my other expenses, from student loan payments to car insurance to monthly train ticket.

A few years later, when I bought my co-op apartment, they lended me some money for closing costs which I paid back in 7 months. I did not want to be in debt to them for very long. A few months later, now freed of that debt (the student loans got paid off a few years earlier), I began my road to investing outside of my 401k.

I should add that my mother was key to these moves, each of which helped me in some big way, from figuring out where I wanted to live, switching from renting to owning so I could stop flushing money down the drain via rent, and to investing because she pointed me toward Fidelity Investments for my first mutual fund, a tax-free bond fund so I could avoid paying taxes on my investment income. She died nearly 19 years ago at age 59 so she could never see how it all turned out for me. But she nor my dad never needed to show any tough love or pay my bills other than half of my major college expenses. I would not have let them.

 

[Rustic23]

We gave our children a 'proper upbringing', what ever that means, and paid for their college. Past that they knew they were on their own.

 

[REWahoo]

I think it is important for parents to communicate to their kids all along what they will and will not pay for. The kids deserve to know from the earliest possible age on. Then they know what to expect, and what to prepare for as they get older.

+1

Setting realistic expectations is an excellent life-skills lesson.

We made it clear to ours from a relatively young age that we would help them all we could to get a 4 (not 5 or 6) year degree at a state university. Anything beyond that would be on their dime, not ours.

 

[pb4uski]

Everyone has their own philosophy of parenting. ...

All I know is my parents made it look a hell of a lot easier than it is.

We struggle with this too. DD is doing well and financially independent. She has actually asked me for help with a savings/retirement plan to see if she is shaving enough for retirement. DS is still floundering around to find his way, but is living on his own away from home without any subsidies.

We still do things to help them out here and there, DS more thna DD, but it is not expected and very ad hoc. Like I helped DS with some car repairs recently - he offered to pay for them but I told him I would cover them since they were in many ways just repairing deferred maintenance items relating to the car we gave him last year.