This story is from September 16, 2019

Let adult kids grow up and manage finances on their own

Let adult kids grow up and manage finances on their own
(Representative image)
Key Highlights
  • Parents could be jeopardising their finances by enabling adult children
  • They may be putting their health and retirement at risk by liquidating their assets at unfair valuations
NEW DELHI: My friend’s son has returned home after a two-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?
Research has established this pattern all over the world, including in the West, where ruthless independence at the age of 18 was the norm. My friend would be called an enabler of a boomerang adult child.
There can be serious consequences of this. Parents could be jeopardising their finances by enabling adult children. They may be putting their health and retirement at risk by liquidating their assets at unfair valuations.
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 had willingly made.
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. 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.
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 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 author is chairperson of The Centre for Investment Education and Learning)
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