Everyone wants the best for their kids.
Whether its happiness, health or wealth, parents and guardians want their children to have an abundance of eachbut at what cost to their own livelihoods?
Courtesy of skyrocketing rent prices, soaring inflation, student debt and a turbulent post-pandemic job market, parents of Gen Z in particular may have to support their children more than previous generations.
A recent survey from Bankrate found that 68% of parents are either supporting, or have supported, their adult children in the pastsaying as a result they delayed their own financial milestones, retirement, paying off their own debt and even had to take cash out of emergency savings.
Now, Gen Z and Millennials say on average they shouldnt have to start paying any bills until theyre 22.
The data found Millennials think they should begin contributing at the age of 20 to the likes of cell phone bills on family plans and subscription services. By the age of 21 they felt they should pay for their own cars, and by 22 their own rent.
Gen Z wanted independence even later, saying they wouldnt want to pay rent until they were 23, or cover their own travel costs until they were 21 years old.
Their parentsGen X and Baby Boomersdisagree, saying some bills should start being paid back from the age of 19.
Helping my kids so much was a huge mistake
For Mark Lacy, helping his two sons out since graduating high school has resulted in a $400,000 hole in his retirement funds.
The Seattle-based 65-year-old has supported his children, now both in their 30s, with everything from college tuition to plane ticketsdeciding this year that the bank of Dad had finally gone out of business.
For some reason my generation has felt this great obligation to keep paying and allowing our children to avoid taking adult responsibility, Lacy said. I dont know where it came from because our parents didnt do that, to help our children avoid the reality of adult lives.
Im convinced that this weakens our culture and our economy by continuing to coddle adult children and not send them from the proverbial nest to take on that responsibility.
Hes not alone. According to research from Age Wave and The Harris Poll of more than 7,000 retirees, 59% of pre-retirees would like to set better boundaries with family members (or close friends) around their financial generosity.
Furthermore, 63% of the retirees questioned said they wanted to limit the levels of financial support they gave to adult children or relatives, with a further 55% saying they wanted to limit the levels of bequests to their heirs.
Lacy believes that some of the behavior comes from peer pressure, with parents seeing what their friends and peers are doing for their children and feel obligated to do the same.
You see these other kids getting these benefits and your children are seeing that happen, some of it you do to keep the peacewrite the check and move on, he explained.
But ultimately it all comes down to the parents, Lacy said: Were the ones that have to have the responsibility to say I dont care what Johnny next door has, were not doing it. You have to have the backbone.
Lacys advice to other parents is simple: Sit down with a calculator and a calendar and do the math. You have to be willing to have difficult conversations not only with your spouse but with your children, have the courage to live in the truth.
Hindsights 20/20, if I had it to do over I wouldve held more firm on some choices. I only have so many years to replace the dollars Ive given them.
Immense sacrifice
Tonya McKenzie and her husband never planned on supporting their children past the age of 18, but when their eldest sonnow 23chose to attend Sarah Lawrence in New York on a basketball scholarship they realized they had no other choice.
Like Lacy, McKenzie said she never had any support from her parentsbut the California couples son moving across the States to one of the most expensive schools in the country simply required their financial support.
The entrepreneur feared that without support her son would drop out of college, and so paid towards housing, additional food, flights, clothes and more recently a car.
The couples retirement plans have not been impacted because of the $30,000 a year they were paying towards their sons expenses, however, the savings the McKenzies painstakingly built up over their lifetime have been hit.
With three other children under the age of 18, McKenziewho is the guarantor on her sons student loanssaid she started teaching her youngest offspring about finance far earlier, setting them up with brokerage accounts and discussing the value of money.
As a parent, you make sacrifices. Youll dont take much for yourself, the mother of four said. We take very limited vacations, were both entrepreneurs so if you dont work you dont get paid. Theres not a lot of excess to be leisurely which of course adds a bit to stress levels because you dont get that downtime. The sacrifice is immense.
The pair have further supported their son by lending their entrepreneurial know-how, helping him set up a social media company to earn cash for his extra-curricular.
What that did is give him the opportunity to earn more money, start building his credit and understand taxes, she added. Its not something [my husband or I] were ever taught, so although he may not understand the immense sacrifice he knows the value in earning a dollar.
Her advice to parents echoes Lacys: Start to save early. We hear it often but we always think we have enough time. The truth is youre wasting time by not starting early. Diversify your investments so it can come from various different ways, and teach your children that we make choices when we come to moneyeverything you want isnt what you need.
Dont start with the numbers
If youre a parent looking to negotiate how to balance the books for both you and your children, JPMorgan Private Banks head of behavioral science, Jeff Kreisler, knows where to start.
First, know that these situations and conversations are hard. Keep in mind, financial decisions are hard because theyre emotional and personal, Kreisler said. Add on dealing with family decisions which in and of itself are also emotional and personaland its even more challenging.
He added the next step is to remember youre all on the same team and in preparation of any conversation about money, put yourself in the other persons shoes.
Ask yourself what the other person needs to feel safe and secure, before asking yourself your concerns and goals.
Its important to ground the conversation on your values, intentions, and goals for your money. Dont start with numbers, Kreisler encouraged.
Once numbers enter the conversation, we tend to fixate, compare, and measure them. By talking about what money means to ussecurity, comfort, opportunity, respect, reward, influencethen the conversation becomes about the important stuff including what you each want, fear, need, and hope for.
This type of dialogue will reveal the purpose of financial decisions which is the key.
Parents worried that they may actually be damaging their children by overly supporting them may actually be right, Kreisler added, saying that without learning, limits and advice financial support can coddle children.
If youre offering financial support to adult children, make sure its coupled with the opportunities and requirements that they learn, grow, and take responsibility, Kreisler said.
