At What Age Should Parents Stop Paying Bills For Their Kids?
With a sluggish economy, stagnated wage growth, and exploding college costs, it’s little wonder that paying bills has gotten more difficult for many people — least of all the youngest generation of workers and students trying to make their mark on the world. Entitled or not, young people are relying more and more on their parents to bail them out of tough financial situations. Whether it’s helping with college loans, paying the cellphone bill, or coughing up extra cash for a parent-funded night at the bar, many young adults are relying on the Bank of Mom and Dad to continue funding their lifestyles.
Young people are called the “boomerang generation” for this reason. They leave after high school, but come back to the nest — sometimes indefinitely — after college or realizing that paying bills on their own is a hard road. However, many millennials aren’t the boomerang generation when it comes to paying for cellphones, health insurance, or even rent. To be a boomerang, after all, you have to take off in the first place. For many families, those young people have never paid Verizon, Blue Cross, or the landlord from their own pockets.
You might dismiss your neighbor’s 23-year-old son living in the basement, floating through life without a plan, as an anomaly — or at the very worst a bad stereotype playing out next door. But the idea of parents supporting their adult children well into their 20s and even 30s is far-reaching. One recent survey found that two-thirds of parents over 50 had supported a child who was 21 or older over the past five years.
It’s easy to see why the problem persists: Time reports that just half of people ages 23 to 26 at least one year out of college have a full-time job, and college loans are now worth $1.2 trillion in the United States. But attitudes about how long financial support should continue vary.
Paying bills for adult children: When does (or should) it end?
In the same article, Time shared the results of a poll taken among parents who were supporting adult children, and the children themselves. Parents said their children should be financially independent by 25, and the children said that should happen by 27. Still, neither side believed those goals would happen in reality. Parents believed they would be supporting their children until age 30, with the children estimating a less-optimistic 32 for parental financial independence.
Obviously, the circumstances and attitudes of supporting adult children vary by family, meaning the right age to cut the financial umbilical cord will also be different in each case. However, most experts agree making that decision will be necessary at a certain point — for the financial well-being of everyone involved. Here are some general guidelines, along with ways to avoid paying bills for adult dependents in the first place.
1. The goal should be younger than 25
In general, parents should seek to have their children be financially independent between the ages of 18 to 22, family finance expert Ellie Kay told Bankrate. That holds up with leaving school — whether it’s high school, a trade program, or college. But simply cutting children off at a magic, predetermined age won’t set them up for success. In order to make that transition smoothly, there should be several financial lessons starting in childhood to prepare them for leaving the nest.
“If you set a precedent that you will just hand over cash every time kids ask, the problem can exacerbate as adult financial responsibilities and mistakes take over,” Kay said.
2. Financial responsibility starts young
Children won’t learn good money management skills overnight, nor will they do so at all if they’re not taught in the first place. It’s the principle of teaching someone to fish versus giving them the fish, and all that. Teaching children what items cost by having them contribute at least part of the money for their wish list can be invaluable. Paying for a cellphone bill, a car, and even part of the auto insurance fall into that category, Kay told Bankrate.
“As parents, we owe our children food, clothing, health care and shelter, not fun with friends, designer clothing, cellphones with data plans, a car or a party-school college experience,” Kay said. “If kids want those things, they need to earn it for themselves. Otherwise, they feel entitled instead of appreciative.”
This can include paying for college — or at least truly earning it by earning good grades or participating in extracurriculars, Kay advises. In addition, adding teens to your credit card account can be a good financial lesson that prepares them with good financial habits early on, before their own credit score is on the line. “You have to assume they will use a credit card, so teach them how to use it sooner rather than later,” John Ulzheimer, president of consumer education at SmartCredit.com, told Bankrate. “Adding your older teen to your credit card account is the equivalent of driver’s ed and a learner’s permit when it comes to credit usage.”
As CNBC points out, increasing financial responsibility as children grow is the key here. If you didn’t prepare your kids to pay their own bills, they’ll wonder why you pulled the carpet out from under them — even if they do own a shiny new diploma.
3. Evaluate the situation on an ongoing basis
Life is unpredictable, and parents might feel the need to support adult children after an unexpected financial crisis comes along. In some cases, a one-time gift or loan can set them up for future success, and it will never be necessary again. But if it’s more likely that a parent’s wallet will continue to stay open for years, it might be time for some tough love.
If that’s the potential, MarketWatch provides some good guidance about how to share those lessons effectively. First, parents need to be honest with themselves about how much good they’re actually doing, financial expert Dennis Miller wrote in the column. “Most parents don’t want their children to struggle like they may have as young adults. But balance that pull with the understanding that those struggles — and successes — are critical if your child is to emerge an independent adult with a solid self-image,” he wrote.
In addition, parents can’t send mixed signals. United fronts are always stronger, and in this case will benefit your child if they know both parents are on the same page. Getting handouts from Mom behind Dad’s back will strain the parent’s relationship, and will only enable the child. However, parents should also be willing to coach the child when it’s helpful. You don’t have to underwrite their new “independent” life, but you can give them sound advice on setting up a budget, editing a resume, or helping them get a start with professional networking.