As parent’s you want to give the world to your children, and do everything in your power to do so. Unfortunately those precedents that are set when they’re children can carry on well into adulthood, except the $20 toys turn into $20,000 cars, the braces turn into wedding dresses, the family vacations into lavish weddings. As much as you may be willing to continue to shoulder their financial load, you have to take your own survival and retirement plan into consideration. So how can you break out of this cycle of giving? Just say no.
We know it’s not quite as easy as that, but this is really what it boils down to. You can gradually try and expose them to the financial world and the things they’ll need to do to take care of themselves, but as long as you keep providing for them, that sense of ever present danger that everyone should have when dealing with their finances will not exist. They’ll always have that failsafe to fall back on, that being your bank account.
If they’ve grown up in nothing but a life of privilege it can sometimes be understandable that they won’t have a true appreciation for the difficulties that could arise through mismanagement of money and it can translate into a low credit report. This lesson can often only be learned the hard way, while they’re young are things are not as tenuous as they would be later in life. Only be experiencing the lows will they ever truly appreciate and respect the highs. You have to consider this a valuable life lesson and not a punishment.
With children that are still living at home, it’s important that they start paying rent to you, and helping out with other bills. Even if your objective is to help them pay for schooling or pay off their schooling as quickly as possible, having them pay rent too will be a good lesson that you don’t always have a nice easy selection of things to pay. They’ll be faced with multiple bills throughout their lives, and may have some tough decisions. You also should not be required to pay for and feed a working adult, especially if they’re spending a good deal of money buying unnecessary items or partying.
You should also stress to them the importance of careful financial planning, and also the risks associated with credit cards and over indulgence. Young adults are bound to feel unstoppable when they get that shiny new credit card give them big buying power, and with only small monthly fees to pay. Sure, they understand the concept that they’ll have to pay it all back eventually, but until they hit the end of their credit limit and realize the buying power’s gone and they’re now going to be stuck making monthly payments for the next 5 years to get it back, they likely won’t fully appreciate it.
The hardest decisions you’ll be forced to make are when your children are at a real financial risk of either being evicted, going without food, not having gas money to get around, etc. Certainly you should do what you can to help them, but if it was their own poor discretion that put them in that situation, you run a real risk of them never learning by constantly bailing them out.