Categories: NewsPersonal Finance
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2024-01-16 10:48 AM

Should You Financially Support Adult Kids?

By Lethabo Ntsoane

South African parents often find themselves grappling with the decision of whether or not to financially support their adult children. While the desire to help them achieve significant life milestones is natural, it comes with potential risks and challenges. A recent survey sheds light on the prevalence of financial support from parents, but experts warn that it’s not always a straightforward decision.

The Landscape of Parental Financial Support

A 2023 survey conducted by Savings.com reveals that a substantial 45% of South African parents with children aged 18 or older spend an average of over R1,400 per month supporting their adult children financially. The reasons behind this support vary, from assisting with educational pursuits to aiding in the purchase of homes and exploring fertility treatments.

Reasons for Supporting Adult Children

Shelmeshia Hill-Brown, from Gauteng, a social worker and therapist, highlights the prevalent themes she encounters in her work. “Parents often step in to help with education, especially since the pandemic. Additionally, buying a home and exploring infertility treatments are significant reasons why parents continue to financially support their adult children,” she notes.

However, the decision to support adult children is not always driven by willingness alone. Some parents feel an obligation, rooted in guilt for not adequately preparing their children for financial independence during their formative years.

Hill-Brown remarks, “They didn’t dedicate one-on-one time to sit down and teach them. The lack of financial preparation during their own upbringing makes it challenging for them to formulate a plan for their children.”

Risks Lurking Beneath the Surface

While supporting adult children may provide a sense of satisfaction, experts caution against the potential pitfalls, particularly when parents themselves are not financially secure. This financial assistance can have a dual impact, affecting both the parents’ financial stability and their relationship with their adult children.

The State of Retirement Savings

Fidelity’s 2023 Retirement Savings Assessment paints a concerning picture, indicating that 52% of South African households may struggle to cover essential expenses in retirement. In a country where retirement concerns are already paramount, dipping into savings to support adult children could exacerbate these worries.

Shelmeshia Hill-Brown, weighs in, advising against depleting savings for the sake of adult children. “You’re blowing through your savings at a much faster rate, and it’s not going to last you as long as maybe you intend to live,” she cautions.

Protecting Finances and Relationships

The risks associated with providing for adult children extend beyond financial consequences; they can strain relationships and breed resentment. Balancing the desire to help with responsible financial planning is crucial.

Communicating Financial Boundaries

To safeguard both finances and relationships, it’s essential for parents to assess their ability to extend financial assistance. Clear communication of these limits is vital. Gradually reducing support and establishing boundaries around future financial aid can help maintain a healthy balance.

Hill-Brown emphasizes, “Resentment can arise, even for parents who can afford to support their kids. Open communication about financial responsibilities and their impact is crucial to preventing resentment and guilt.”

The Dangers of Unlimited Financial Support

Providing unlimited financial support may impede the development of financial independence in adult children. Hill-Brown warns, “Financial support without limits could hinder your child from becoming financially independent, passing on the same challenges to the next generation.”

Encouraging Financial Independence

After setting financial boundaries, parents can play a proactive role in steering their adult children toward financial independence.

Involving Adult Children in Finances

One strategy is to involve them in financial discussions. Kayla Walter suggests, “Bring them into meetings with your financial advisor, making it a family affair. This way, they can gain insights into financial planning and learn more about responsible money management.”

Guiding Toward Financial Services

Rather than direct financial assistance, parents can guide their adult children toward relevant financial services. For instance, in the case of significant debt, pointing them to reputable debt consolidation services can be a more sustainable solution.

The Consumer Financial Protection Bureau offers a wealth of resources that adult children can explore independently.

Leading by Example

Setting a positive financial example is invaluable. Shelmeshia Hill-Brown stresses, “There’s never not a good time to set a good financial example for your children.” Parents who demonstrate healthy money habits are more likely to influence their adult children positively.

Conclusion: Striking a Balance

In the complex terrain of financially supporting adult children, finding the right balance is essential. While the desire to help is commendable, it should not come at the expense of parents’ financial well-being or hinder the development of financial independence in the next generation. Open communication, clear boundaries, and responsible financial practices can ensure that the journey of supporting adult children remains a positive and mutually beneficial one for South African families.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo