When supporting your adult child becomes enabling

Posted by Cindy Wilson.
We advisor types are always talking about financial security, like it was the most important thing in the world–but of course, it’s the people in our lives that matter the most. This especially holds true for our kids. We’d do anything to help them, and this maternal instinct doesn’t just go up in smoke with their 18th birthday candles.
Protective mom or overprotective enabler?
That biological drive to nurture and provide for our children is strongest when they’re helpless infants, but I’ve met a significant number of clients–kind and agreeable women—who have somehow allowed their children to remain reliant upon them well into adulthood. Though it comes from a good place, this protracted state of financial dependency can be harmful to both mother and child alike.
There’s a fine line between being a mother and being helpful and supportive compared to instilling bad habits. It’s something like the difference between encourager and enabler: Encouragement makes our loved ones strong; enabling makes them fragile. One leads to positive outcomes (self-sufficiency, financial independence, the means to support a family) and the other arrests development and may even endanger your nest egg.
Some telltale signs you’re a financial enabler:
1) You avoid difficult conversations about money, and shy away from conflict.
2) You’re in denial about your adult child’s financial follies.
3) You think his or her money woes are just another phase, and that eventually, they will outgrow it.
4) You find yourself defending their poor choices to your spouse or concerned friends.
5) You tend to blame external factors and bad luck, for their strapped situation.
6) You still see it as your job to shield them from life’s harsh realities.
7) You want to exert some control over their life.
Whenever I identify an enabler, it helps to dig deep and learn what their values are. Mothers who value compassion more than autonomy, have a harder time saying “no” to their child’s monetary demands, or maintaining a healthy distance at the slightest sign of economic distress. It is a personal decision and I try to do my best to help parents make educated decisions about that next monetary gift.
Cutting the purse strings
Once you’ve come clean with yourself about your emotional biases, you can make a more rational decision as to whether it’s time to cut the purse strings. Your actions can now be guided by personal (rather than personality) factors not the least of which is your retirement readiness.
If you grabbed a random passerby on the street, I doubt they could tell you how “on track” they were. Most of us haven’t got a clue. So, make sure you use a basic Retirement Goal Evaluator to determine if you’re on track to live comfortably in retirement (that is, to replacing around 80% of your working income). Once you take this test, you’ll find yourself in one of three camps:
  1. Oversaved
  2. On track
  3. Undersaved
If you’re oversaved, great job! You may decide you can afford to loan your future heir an advance or two–the key word being loan. Money gifts send the wrong message. A defined repayment schedule will force your son or daughter to get their financial act together. Of course, the Bank of Mom isn’t going to take a borrower to court if they fail to repay. But if you’ve ever lent money to a friend or family member before, you’ll know about the complications that can bring to bear on a relationship.
If you’re on track, you’ll want to stay on-track, and not let your “mother hen” generosity derail your plans. If you decide to support your adult children, it must be in a way that won’t jeopardize your standard of living now or in retirement, such as offering free rent temporarily.
If you’re undersaved, explain why you’re in a tough situation yourself, sharing the results of your Retirement Goals Evaluator if necessary. Maybe you still have college debt of your own. Your borrowing and lending powers are reduced, when you don’t have many earning years ahead of you, and are struggling to play catch-up. Walk your adult children through options that don’t include Bank of Mom, such as student loans, if applicable.
Your kids are likely turning to you for help because of bad decisions they’ve made. Sit down with them and go through a debt eliminator tool or app. They might not have the drive to do it themselves, especially if, up until now, your offspring have been treating you like a wellspring of cash. They won’t quit drinking till the source dries up.
Just remember, your kids may be struggling now, but they have years of earning potential ahead of them. Instead of relying on you, it might be better if they capitalized on that potential, by taking out a small loan. Not paying it back would have real consequences, and this might incentivize your loved one to spend and save more responsibly.
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July 25, 2018