Consequences of financially supporting your adult child and 3 ways to stop doing it
Financially supporting a grown-up child while imperilling one’s future is not wise.
My friend’s son has returned home after a 2-year stint in Bengaluru. He wants to recover from another failed attempt to establish his career. He is 34. They will now house, feed and care for him and hope their only child will find a job he can keep. The family finances are already precarious, but my friend has signed up for another part-time job she will do after office hours. How do parents wean their adult kids off this cruel financial dependence?
It is not uncommon in India for adult children to live with parents. There is both convenience and complaint about the practice. Research has established this pattern all over the world, including in the West, where ruthless independence at the age of 18 was the norm. There is enough evidence of substantial parental support to adult children even in these societies. My friend would be called an enabler of a boomerang adult child.
Enabling comes in various forms. Parents may pay off education loans of grown-up children; fund an international holiday or an expensive birthday party; take on payment of bills, EMIs and insurance; bail out credit card dues and defaulted loans; volunteer down payment for the house or car; offer a monthly allowance; or subsidise health costs.
What drives parents to continue to support adult children who should be responsible for their own lives? Growing up is about making choices and facing the consequences of those choices. By offering to “help”, parents actively impede their adult children from being responsible for their own actions.
There can be serious consequences.
Parents could be jeopardising their finances by enabling adult children. They may be putting their health and retirement at risk; liquidating their assets at unfair valuations; unevenly dividing their wealth or compromising on goals. My friend should not be working two jobs when she is nearing retirement.
Sociologists point to the “child-centric” family structures that have evolved in modern society that psyche parents into believing they exist for the well-being of their children and therefore, have do what it takes. If the early primitive societies were driven by the basic instinct to reproduce and further the species, the modern society has made having a child a completely emotion-driven deliberate decision that hinges on the need to create a cohesive family unit; the craving for being loved, needed and validated; the compulsions of succeeding and doing better than one’s cohorts; and the burden it places on parents to hold themselves responsible for their child’s success, happiness and progress in life.
This obsession has triggered a generation of helicopter parents who have to know and solve every one of their children’s problems, shielding them from the adverse consequences all their lives. Even if these arose from conscious choices the adult child willingly made.
There are versions of enabling parents and children. There are those who so smother with gifts, grants and cash that the children stay reckless all their lives. Think about politicians and business people who accumulate wealth for many future generations. There are children who do not take their adult lives seriously, making careless choices, blaming everyone but themselves for their situation. There are schemers who know which button to push to get the parent to fund their next big expense, while they themselves continue to spend on indulgences. There are the entitled who wouldn’t care much about badgering and threatening the parent for money.
While we can argue that both sides are to blame, we can agree it is tough to see merit in this system of extended subsidy. What can parents and children do to keep the financial transactions sane and sensible?
First, make sure there is a rule-based system that clarifies the basics. In many Indian homes where the adult child and his family lives with the parents, there is a pooled account for household expenses into which everyone contributes. There is a clear understanding about who will do what, and who will spend for what. In exchange for the saving on rent, and the possible inheritance of the property, children take care of the parents well into their old age. Not all arrangements are firm; but the broad rules are set.
Research shows financial support that is finite, measured and clearly defined is less burdensome on the provider. We advised our friend to ask the son to live independently on a fixed monthly allowance for a fixed time, within which time he had to find work. Keep help specific and small. Do not get into arrangements that are tough to discontinue. Involve a trustworthy third party if needed.
Second, recognise your emotional limitations and psychological responses to your child’s demands. It is important for both parents to agree that they need to limit their support. Many parents choose to live separately from their children, but their being needy of acceptance and attention leads to financing their children and remaining unwilling to say no. Children learn which button to push. Parents relent egged by varying emotions of fear, hope, guilt, remorse and threat to the demands of unreasonable children.
Third, reinforce the power you wield on your assets and money. It is what you have earned in your lifetime, and you have the right to spend it in a manner you see fit. You may want to give it away in charity; you may want to create a fund for your grandchildren’s future rather than let your children spend it; you may need it for your own retirement and use; and you have to express these needs without hesitation, so you can prioritise how to use your money.
A piece of sane advice someone gave my friend: When an adult child asks for a favour, from babysitting their child to asking to boomerang back, the standard answer should be: “let me think about it and come back to you.” Do not force yourself to agree immediately. Buying time will reduce the burden and provide the space to say no if you have to.
(The writer is Chairperson, Centre for Investment Education and Learning.)