Teach Your Kids Financial Independence While Keeping Your Sanity

Parenting Advice For Teaching Kids About Money
Self, Family

Learn how to set clear expectations about money with your kids.

We've heard that calls from adult children to their parents are about as frequent as a solar eclipse. So when our friend, Brenda, saw her daughter's name pop up on her phone, she was thrilled. Here's how their conversation went:

Brenda: "Hey, Steph!"
Steph: "Hi, mom."
Brenda: "How's it going?"
Steph: "Not so great. Apparently you need to come sign this loan too."
[Long pause]
Steph: "I'm at the car dealership and it's taking forever, and NOW it turns out I need to wait for you to come sign the loan for my new car."
Brenda: "New car? What do you mean new car?"
Steph: "Mom! You know how gross my old car is. It's nasty, and the air conditioning doesn't even work."
Brenda: "… yes, but it's paid for and summer's almost over."
Steph: "Seriously? Come on mom. Pleeease? It won't take long. Just come meet me."
Brenda: "How are you planning to pay for this car?"
Steph: "I interviewed for another awesome job last week. I'm sure I'll get it. And I am not going to drive this hunk of junk to a new job!"

What would you do? Block all future calls? Drive your late-model car down to the dealership to help? Meet her for lunch to try and talk some sense into her? Or just roll your eyes and think "here we go again"?

Tension is inherent in relationships with adult children and their parents, but money issues just bump it to the next level. Because adult children are asserting themselves and enjoying newfound independence, they don't typically want to consult with their parents about major decisions. But they're not completely financially independent, either. It makes for a sticky situation. Unspoken or unclear communication about money between the two parties make the situation even worse, because we all hear what we want to hear. For example, we wonder how often claims like these have taken place:

"That was a loan? I'm your kid. I thought it was a gift."
"I didn't know there was a time limit on when I paid you back!"

If you plan to assist your adult child with financial support, be sure to put it in writing. Don't call it a contract, as that might create feelings of negativity or foster mistrust. Instead, call it a Letter of Understanding. Put the agreement in writing so both parties understand the expectations. It doesn't have to be a formal contract, but a Letter of Understanding serves the same purpose and settles the potentially difficult-to-navigate relationship side of it.

Don't feel squeamish about taking this action. This piece of paper shows you value your relationship and want to preserve it. It's not that you don't trust them; you just understand that time will pass and memories get foggy.

And, as you teach them how to grow and mature, this could be a very beneficial teaching tool for them. If you decide to lend money to your adult child, try to honor his or her "adultness" with a real agreement so everyone is on the same page.

Do you have questions about money situations with your adult child? We'd love to help. Take our free Money Personality Quiz and find out both of your Money Personalities. Email us at info@TheMoneyCouple.com or ask us on Twitter or Facebook.

The Money Couple®
Scott & Bethany Palmer
Creators of The 5 Money Personalities™

Scott & Bethany Palmer are regulars on national TV and radio and speak internationally about The 5 Money Personalities™. To learn more about your Money Personalities, get FREE resources, and take the free, scientific quiz, visit TheMoneyCouple.com or pick up a copy of their book The 5 Money Personalities: Speaking the Same Love and Money Language.

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