How To Set Financial Boundaries with Your Adult Children

Are parents paying their adult children’s bills, even despite them being employed?

Short answer: Yes. According to a 2017 survey of 800 millennials by Instamotor, close to a quarter reported their parents paying at least one of their bills. Each person surveyed was employed – working at least 35 hours per week.

The bills being paid by parents? 

• Cell Phone – 53% reported their parents paying their cell phone bill. 
• Car Insurance – 31%
• Car Payment – 30%
• Utilities – 30%
• Rent / Mortgage – 27%
• Health Insurance – 18%
• Student Loans – 18%
• Credit Cards – 17%
• Other – 5%

In my research, I found the average cost of the most common bills being paid (Cell Phone, Car Insurance, Car Payments, Utilities) is generally within the $50 – $200 range per month. Maybe it’s because these bills seem deceptively low each month that they are easy bills to pay on behalf of adult kids. But don’t let those seemingly minimal costs fool you – paying these bills a few times per year can quickly add up, ultimately leading to a circle of dependency for your adult child. 

Another potential bill to consider: The cost of a wedding. 

More than 60 percent of millennials in the study reported their parents would help them (or have already helped) pay for their wedding. In a study by The Knot, 10 percent of couples paid for their wedding without any financial support.

Keep in mind, the average costs of weddings in the U.S. for 2018 was close to $34,000, according to The Knot. Statistically speaking, parents are footing a chunk of that bill – a 45 percent chunk on average if you’re the parents of the bride. Parent of the groom? That average being paid is around 13 percent. That’s anywhere from $4,000 to $15,000 if you’re near that $33,931 wedding cost. 

How can you help your adult children have financial independence, without chipping away at your own funds? 

• Have a plan.  It’s up to you to decide how much financial support (if any) you want to provide to your millennial child. If you fall into the category of being a parent who pays one or more of their bills, it helps to have a plan of how to transition that bill-paying back over to your child. One way to do this is by simply having a conversation. You can try asking questions that get more to the root of the financial assistance, such as, “Why do you need help paying rent this month?” or, “Is your income able to cover all of your financials expenses?”

Let’s use the cell phone bill as an example: 

Much of the millennial generation started getting cellphones under the age of 18, putting practically every family-unit on a family-plan. So it’s no surprise that it’s easy as a parent to stick with the family-plan and pay the bill. Paying $50 a month for their phone bill can quickly evolve into $600 for the year, and depending on your financial situation and viewpoints, this is either a lot of money or no issue. But it’s not the actual bill that is the biggest dilemma – it’s the pattern of dependency that paying their bill can create. 

The big problem is it can prevent them from becoming fully independent with their finances, preventing them from having a realistic grasp on what things cost and add up to in day-to-day life. Which can then down the road, lead to much larger financial hiccups. One option for your adult child to pay their own cell phone bill could be that they send you the amount due each month for their phone. This way both the family-plan remains intact and they have financial accountability. 

• Be proactive. No matter the age, it’s always good to talk with your kids about saving, budgeting and investing. These can be ongoing conversations starting from when they are young and span into adulthood. It can also extend beyond talk of numbers. It can be a big-picture discussion about living within their means and what that actually looks like.
• Meet with a third party. Meeting with an independent party (such as a Certified Financial Planner) can help create a financial roadmap for both you and your child. You can get more clarity on what your financial boundaries actually are and how much you can help pay for (such as a wedding) without making too much of an impact on your retirement savings. 

Setting financial boundaries with your kids can be difficult. Let us help you get your financial roadmap started.