Supporting Adult Children: Is It Time to Set Them Free?

May 3, 2019

Millennials – those currently age 18-38 – are predicted to be the first generation in US history to do worse financially than their parents. According to CNBC, in 2017 about 31% of young adults were living with their parents. A study by in 2017 found that 74% of parents with adult children say that they help their grown children financially by either paying some of their living expenses or helping them pay down debt. found that cell phones are the most commonly covered expense (53%) followed by car insurance (31%) and car payments (30%).

You may have some divorce cases on your desk right now in which your client is including expenses related to grown children in their budget. It might be easy to pick out these expenses, for instance a student loan payment. But some expenses might be buried, such as car insurance when it is bundled on the parents’ policy.

When alimony is being discussed it could be important to know how much of each party’s budget is attributed to adult children. These dollars factor into how much disposable income the payor spouse has or the need of the payee spouse. Even if there is no alimony but your client will be living off their settlement then these expenses could be relevant. In the cases where there is plenty of money to go around then it doesn’t matter if one or both spouses want to continue to support their adult children. But if money is tight, a discussion may be needed to see if these expenses could be cut from the budget. As much as we might want to help our children live a nice lifestyle, it isn’t always practical.

Asking parents to stop supporting their adult children is difficult. The parent may see their support as a way to show their love for the child, or they may feel their child doesn’t have the capability to support him or herself. What the parent doesn’t see is the ways in which this support is hurting the child. Children who are dependent on their parents for support will not learn to be financially independent. They will not acquire the financial skills to budget their income and make decisions on spending vs. saving. These are skills they will need in order to successfully reach their own financial goals, whether it be buying a house, going on a vacation or saving for their own retirement. It might even be helping to mask a more important underlying issue – that the child is not equipped with the job skills to earn their own living. If the parent is worried that their child won’t make good financial decisions or can’t support themselves then encourage your client to have their child seek the advice and counsel of a financial planner.

Divorce often means making some hard decisions. Cutting off dependent adult children may be one of those decisions your client doesn’t want to make, but should make. We can help you show why this makes good financial sense for everyone.

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