Advice Please Regarding Young Adult Childen Finances

[nhcycling]

They are adults now, let it go! Get off those joint accounts, it’s their business now. You have launched them into adulthood, your job is done. They are accountable to themselves only, not you.

 

[Bryan Barnfellow]

I think you are good parents to care so much about your children and their financial well being. Kudos to you for that. Yes, you might lighten up in many different ways, as others already have suggested; however, we don't know much about your family history and relationships, do we? Only you can decide what feels right and will work for them and for you.

We know that they worked in college and during the summers (good for you for encouraging that!), they work hard now. Their peer group social interactions are really important right now and their spending might be stretching to keep up for now. Over time, however, the peer group changes as individuals mature.

So, perhaps lean back (definitely give up access to their bank accounts) and wait, keeping the lines of communication open and continuing to provide advice as requested.

Marriage, a first house, their first health scare that will be actually nothing at all -- these will likely get them to focus more on their lack of immortality and just how relatively short a lifespan is. Usually this happens in their thirties. So, plenty of time.

It would be lovely if you could update the forum from time to time (using this thread) and let us know how it's going.

-BB

 

[Katiek]

I think taking your name off the account is a good step, but you could also have a conversation and say that you realize that they're adults now and need to be responsible for their own finances. By emphasizing their independence, you can also highlight that you are not there to support ongoing financial deficits.

 

[HI Bill]

I would:
1) Take my name off the accounts.
2) Consider the gifts just that, and not have expectations about how they were/are used.
3) Be clear that the gift giving is over.
4) Stay out of their finances.
5) Let them learn on their own.

Tough love!

 

[45th Birthday]

I think you are good parents to care so much about your children and their financial well being. Kudos to you for that. Yes, you might lighten up in many different ways, as others already have suggested; however, we don't know much about your family history and relationships, do we? Only you can decide what feels right and will work for them and for you.

We know that they worked in college and during the summers (good for you for encouraging that!), they work hard now. Their peer group social interactions are really important right now and their spending might be stretching to keep up for now. Over time, however, the peer group changes as individuals mature.

So, perhaps lean back (definitely give up access to their bank accounts) and wait, keeping the lines of communication open and continuing to provide advice as requested.

Marriage, a first house, their first health scare that will be actually nothing at all -- these will likely get them to focus more on their lack of immortality and just how relatively short a lifespan is. Usually this happens in their thirties. So, plenty of time.

It would be lovely if you could update the forum from time to time (using this thread) and let us know how it's going.

-BB

This is a very perceptive post. It turns out they have both had serious medical issues that we think are for the most part resolved (only time will tell). Perhaps this is why we are so close to them and also border on coddling/controlling them so much. When they were at the bottom with their issues, we were truly their only lifelines.

 

[ivinsfan]

This is a very perceptive post. It turns out they have both had serious medical issues that we think are for the most part resolved (only time will tell). Perhaps this is why we are so close to them and also border on coddling/controlling them so much. When they were at the bottom with their issues, we were truly their only lifelines.

A lot of parents are so close to and coddle their adult children. So your kids both know if they hit hard times or speed bumps that they can come to you for support.

I suspect after putting them through school and helping them with serious medical issues, you are having trouble letting them move on and make their own mistakes. Treat them as adults and see how that works out. Boundaries are good every healthy relationships needs some....

 

[brett]

I do not understand why you not only still have access to their financial accounts but you also check up on those accounts. Hard for me to understand why they allow this to happen.

They are adults. Let them make their own mistakes. You can only do so much. Then it is up to them.

Whatever you do, do not give them the impression that you are there to 'bail' them out financially. You would be doing them a disservice. Time to let go. Besides, it will only end in tears and resentment.

 

[USA]

My thought is simple. Remove yourself. Stay out and don’t even inquire.

 

[Jerry1]

Just for some fun, I might also be inclined to express my interest in a large charitable gift. It would be good for them to at least question whether or not there will be an inheritance. There are many examples of wealthy individuals significantly restricting what their children will inherit in the interest of their children’s growth.

As others have said, I would have one last talk with your “children” and let them know that your involvement in there finances is going to change to reflect their current status - that of successful adults. Adults that you should be proud of and will love even if they end up learning a few hard lessons along the way.

 

[daylatedollarshort]

You may want to read the parts in The Millionaire Next Door about adult children economic outpatient care. TLDR version: Don't do it. It encourages adult children to live above their means.

I think you are upset over a problem you may unintentionally be helping to create. I agree with the majority of posters - take your name off their accounts and don't give gifts with strings attached.

 

[DrRoy]

Take your name off their accounts!
They are adults now and need to learn.make mistakes on their own. You can be there to help as requested.
You have done your part as far as teaching them and can continue if they ask.
It is hard as parents to watch our children make mistakes or do things we wish they wouldn't. But that is how they learn.
Be there to lend a hand or help them if they fall--but at their request.

+1 You need to let go and let them find their own way... you can't push a rope... or adult children.

We have a similar situation in that our adult children will not finish their college education. They handle the money that they have fairly well, they just do not qualify for anything that pays much. DW and I have given up on discussing it with them. It just makes them resist more.

Others have already said it - you have to detatch from the issue, and do not enable them further.

 

[Carpediem]

They were brought up in very comfortable circumstances. We have always been concerned that it would be difficult for them to adjust to a much more modest lifestyle, and also concerned that they might not be as motivated since they can probably deduce that they will inherit a large amount of money some day.

I find the bolded statement above interesting / surprising. My two 20-something year olds have no clue about my own financial situation. I suppose they could deduce whatever they want about future inheritances and live their financial lives based on that assumption but it would be a risky game to play.

 

[Jeffman52]

Both sound like they are well on their way to becoming independent adults. Don't deny them the opportunity to continue that journey, which almost always involves making mistakes along the way.

This ^^^

My wife and I help our kids financially very very little. We have told them from the time they were teenagers that we plan to spend every penny before we die and leave them nothing. In fact we plan to be spending that last penny as we both keel over dead. We earned it, they didn't so they aren't entitled to a penny of inherited money. If we decided to leave them something, they wont know until we are gone. The very reason we do that is to keep them from thinking (even subconciously), "Don't worry about finances, we will inherit a pile later and that will take care of it"

Both adult kids have good jobs but are making their share of mistakes. They are also living with the consequences of those mistakes. if it's not life or death, then we don't bail them out. They have to figure it out. We will give advice when it's asked for, but outside of that they are learning to be adults in a hard world.

 

[Midpack]

Happens on forums, but I never get these threads. Where an OP asks a question, but has an answer in mind all along - looking for validation from strangers, not other views. And withholds, and later shares pertinent details. No harm, but why?

 

[exnavynuke]

So it seems I need to take myself off their accounts. This has been in the back of my mind, and I know it isn't typical to have access, and I also know they need to develop their own independence to a greater degree.

I don't think they feel entitled, they are very grateful for what we have given them. We are a close family, and they do rely on me for financial (and other) advice. I do not think they resent us knowing some of their financial details, and I don't think this makes them more likely to overspend. Just to be clear, we really don't know what they're spending money on because we don't see the credit card statements (and almost all their non-rent spending is on a credit card), just the amounts.

They were brought up in very comfortable circumstances. We have always been concerned that it would be difficult for them to adjust to a much more modest lifestyle, and also concerned that they might not be as motivated since they can probably deduce that they will inherit a large amount of money some day.

The suggestion from nwsteve about funding a Roth instead was brilliant. If we continue to gift them money, it will be in some form of retirement savings as long as we can avoid exceeding limits.

Good reply and takeaway

 

[Ally]

Thinking back to my own life, I didn't get serious about my finances until I was married and had children, which was when I was nearly 30. At age 31, I went through a divorce which made it very difficult financially for several years. I got remarried at age 34 and that's when we both made it a huge priority to get out of debt and contribute to retirement. So starting late, doesn't mean that you can't retire early and live the life you want. I think you need to quit worrying over their finances, provide advice when asked and let them make their own mistakes.

 

[45th Birthday]

Happens on forums, but I never get these threads. Where an OP asks a question, but has an answer in mind all along - looking for validation from strangers, not other views. And withholds, and later shares pertinent details. No harm, but why?

The "answer" I had in mind was just a nagging thought, I wanted to get views of other people, some of which are not exactly strangers since I have read other posts they have made. I didn't "withhold" any information, another poster made me realize it might be a factor, so I shared it.

 

[ivinsfan]

The "answer" I had in mind was just a nagging thought, I wanted to get views of other people, some of which are not exactly strangers since I have read other posts they have made. I didn't "withhold" any information, another poster made me realize it might be a factor, so I shared it.

You at annoyed at or disappointed in your kids so it's more then a nagging thought.

We had a poster on here recently who wanted to put a spendthrift clause in her will because her son was so horrible with money.(Meaning she didn't approve of the way he spent, much like you don't approve).

Posted a lot of negative details about the kid and about 5 pages in reveals he is an Army Ranger. Don't focus so much on the spending habits of these young adults, they are going to pick up on your disapproval no matter how much you think you are hiding it.

Just back away and don't give them any more cash, trust them to get it figured out.

 

[pb4uski]

....her brother, who was a liberal arts major and lives in a LCOL place (also with a salary to match). They both contribute to retirement plans through work, but at modest levels....

One thing that you may want to check out if you haven't already done so is the retirment savings tax credit (Form 8880). Essentially, the federal government offers a tax credit for low earners who make retirement savings. The credit is scaled, with lower earners getting as much as 50c for each $1 of retirement savings and as low as 10% for higher earners.

DS's AGI is slightly more than the 50% threshold so what we do is deductible IRA contributions to reduce his income so that he qualifies for the 50% credit and then Roth contributions to optimize his credit.

So by contributing 2x his tax to retirement accounts, he gets a tax credit that totally offsets the tax and gets a refund for every dollar withheld. For example, this year his tax was $825.... absent anything his refund would have been $1,125. However, by making $1,650 of retirement savings contributions he got a $825 tax credit that reduced his net tax to zero and he got a refund for $1,950. For him, the retirement contributions are just moving money from one pocket (taxable savings) to another (tIRA and Roth).

Can't beat "free" money.

 

[ivinsfan]

One thing that you may want to check out if you haven't already done so is the retirment savings tax credit (Form 8880). Essentially, the federal government offers a tax credit for low earners who make retirement savings. The credit is scaled, with lower earners getting as much as 50c for each $1 of retirement savings and as low as 10% for higher earners.

DS's AGI is slightly more than the 50% threshold so what we do is deductible IRA contributions to reduce his income so that he qualifies for the 50% credit and then Roth contributions to optimize his credit.

So by contributing 2x his tax to retirement accounts, he gets a tax credit that totally offsets the tax and gets a refund for every dollar withheld. For example, this year his tax was $825.... absent anything his refund would have been $1,125. However, by making $1,650 of retirement savings contributions he got a $825 tax credit that reduced his net tax to zero and he got a refund for $1,950. For him, the retirement contributions are just moving money from one pocket (taxable savings) to another (tIRA and Roth).

Can't beat "free" money.

So this a way to help educate kids about money, taxes and savings. No judgement no spreadsheets, a real time lesson. Now it's a tad contradictory as you need to know your kids annual income, which isn't really backing away from their finances, but what a positive way to educate someone about the value of saving.

 

[GA_Brown]

We set up a Roth and Investment accounts for our two with our financial company and have my name on the accounts. The deal with them is we will contribute what we can every year but this is for their retirement. If they withdraw any money with out discussing it with us from these accounts, we will stop the contributions.

We also try to be generous to them through out the year, might not be cash but items they need or want.

Right now it works for us.

 

[brett]

A good friend of ours is still 'helping' her son financially. To the point where her current retirementl lifestyle is seriously threatened. She is being bullied financially for more and more resources.

The more she gives, the more he demands and the less he appreciates. Now the grandchildren 'card' is in the equation.

Alas, this started in his late teens and has progressed through to his mid thirties. Her health has suffered because of it.

She unwittingly became an enabler and cannot seem to stop. She knows better after spending her working life as a personal loans officer in a bank. We hate to sit back and see this unfold.

I do not think that you do your children or yourself any favors by coddling them. There is a huge difference between helping and becoming entangled in the financial affairs of your children.

 

[bclover]

Thinking back to my own life, I didn't get serious about my finances until I was married and had children, which was when I was nearly 30. At age 31, I went through a divorce which made it very difficult financially for several years. I got remarried at age 34 and that's when we both made it a huge priority to get out of debt and contribute to retirement. So starting late, doesn't mean that you can't retire early and live the life you want. I think you need to quit worrying over their finances, provide advice when asked and let them make their own mistakes.

thank you Ally,

Wow you guys where good at 20.

lol, op when I graduated college I also lived beyond my means.
I was a single gal in NYC!! I had no kids, no husband and no parents. And sorry I was not interesting in hearing what an old fart at 55, 60 wanted to tell me. two of my best friends and myself got an apartment together and then it was "sex in the city" before HBO. I don't regret it one second, yep I shopped, drank, went to night clubs, I didn't go into debt but I darn sure did not save much.

I really do feel bad for the "youngins" nowadays. It;s like the nanosecond you hit 18 you have to start worrying about whether or not you will have enough for retirement.
Seriously. I went to a neighbors kid bar mitzvah and in lieu of gifts they asked for donations into his retirement account AT 16!! damn, whatever happened to wanting to blow it on a ski trip with friends. jeez.

look, making financial mistakes at 21 does not mean a life of living under a bridge when you're old.

I help my kids occasionally. when my oldest moved out of the house I threw 1500 at the security deposit. when they were both in college I paid for their car insurance. my youngest graduates in May, so he knows, next year car insurance will be on him.

I am on my youngest 22 bank account because he went to school out of state so It was easy getting money to him.

Personally I want my kids to enjoy their 20's. I want them to go to an Eagles game and buy a beer without having to stress whether their Roth IRA is funded. no they will not have 40K by the time they are 30. who comes up with these numbers anyway.

let your kids make mistakes, they will be ok.

 

[MRG]

...snip..


She unwittingly became an enabler and cannot seem to stop. She knows better after spending her working life as a personal loans officer in a bank. We hate to sit back and see this unfold.

I do not think that you do your children or yourself any favors by coddling them. There is a huge difference between helping and becoming entangled in the financial affairs of your children.

A lesson I watched unfold that made a huge impact on my life.

My parent's couldn't stop parenting my brother. He just didn't get it, and they(DF) would never miss an opportunity to correct him. DB was always wrong.

RIP, buddy I miss you. January 5, 1944 - September 17, 1978.

 

[GravitySucks]

Pay off cards every month.
Save a little bit for retirement in their 20s.

Only thing I see wrong here is you gave them money they didn't use as you see fit. Why would you give a twenty something money so they could look at it sit in a bank account?
Sorry, but I don't see this as gifting money, you were expecting to transfer it to another account.
Get off their accounts, they're adults and your snooping is going to cause trust issues. If you don't like what they do with your money don't give it to them.