Parents love their children unconditionally. As parents, our children would be kids to us, even when they are 100 years old. However, we as parents need to understand that our children should be independent, financially stable and living to their fullest potential. For that, we need to cut that financial cord.
Related: Money Lessons For College Graduates.
Taking financial care of an adult child who is well in their 20s would do them more harm than good. Considering that the number of adults living at home has risen to 36 percent in 2012 in the US alone. Consider how high it could be in other countries!
In fact, half of the kids will be living with their parents by the next generation. The financial instability of adults today is an alarming statistic, one that needs your attention. So, to help your kids be independent, you have reduce or even stop financial support from your end. But, how to cut the financial cord? When to snap those economic ties?
There’s no right or even wrong age to cut the financial cord. But consensus agrees that the financial wire must be eliminated by the time your child is in their mid-20s. To make the process smoother and effective for them, you need to ensure that the kids start earning for themselves at an early age.
For instance, they should be paid a pocket money for completing chores around the house, or they must make some money through part-time jobs if they wish to save up for something precious or a car. This will help your kid appreciate the cost. Teach your kid the value of money.
We know that you as parents earn money to entitle your child everything. However, that’s doing them more harm than good. If you are wondering how to cut the financial cord, you might want to start by eliminating the concept of entitlement. Of course, whatever you earn or amass over the years is all for your kids, but they should learn the value of it.
For instance, just because you can afford a car for them doesn’t mean that you should get them anything they want. Your kid should work for it. By starting early, you will ensure that your kids earn for themselves, and they value things, which will make them more appreciative of the money.
How old is too old
Obviously, you cannot have a 39-year-old living under your roof as a ‘kid.’ Remember that having an adult child using your finances will impact your life as well. In fact, some parents are now taking on debt or even delaying their retirement because their child cannot support themselves.
So, make sure that even if you have to support your child in their mid-20s, the reason is strong enough. Also, if you are thinking about when to cut the financial cord, know that it should be cut by the age of 30 years at the most.
Have a conversation
If your child has been financially dependent on you for too long, you might need to have a conversation before cutting the cord. You need to let them know that people have to move out and this is good for the two of you. Be kind and loving. At the same time, be firm on your stance and give them a time-frame in which they should move out.
Design and implement a plan
Now, this can be difficult. Your child may come off as unappreciative, and you may have arguments and fight. Plus, there may be some difficulties for your kid to get their life in order. So, give them a grace period- say two to three months when they can find a job, go to college or get an apartment. You can even teach kids how to live rent-free somewhere.
Now, just because you can’t support them financially doesn’t mean you shouldn’t be helpful. You can help the child with their job, help them hunt it or even support them when they are finding an apartment.
If your child is financially independent, has some savings but doesn’t have enough to buy a house or make a down-payment on the property, support them financially as well (if possible), but make sure that the help is limited and doesn’t affect their independence.
So, emphasize on adding value to money, give them an opportunity to grow. This is the perfect answer for how and when to cut the financial cord.