Setting Boundaries With Adult Children: Money Talks

Presented By: Pennsylvania Capital Management

Do you know a surefire way to send parents into a tizzy? Have them try to list every single thing they’ve spent money on for their kids. From the diapers to the daycare. From the toys to the tuition. From the Air Jordans to the hair accessories to the birthday gifts to the summer camp costs to all the rest, it takes a lot of money to raise a child. Current estimates from a U.S. Department of Agriculture report called Expenditures on Children by Families illustrate that, for the typical middle-income family, it takes about $300,000 to raise one child for the first eighteen years of life. After that, you can still help your kids out from time to time, but it’s time to start setting boundaries with your adult children. Especially about money. 

After your kids turn 18, the aforementioned number can skyrocket for upper-class families, between the costs of tuition for private school and other expenditures—and then add in the cost of college. It’s not unrealistic for each child to cost close to the neighborhood of a million dollars or more. It’s not that we mind all that much, of course. 

There are few joys in life like raising children and watching them grow up. But if we were to see all of the costs in one itemized bill, our jaws would drop and our mouths would open so far that we could slurp dinner crumbs right off the floor. 

Do you really want to throw parents into a DEFCON 5 tizzy? Let them hear these words: “Mom, Dad. I’m moving back in.”

7 Strategies for Setting Boundaries With Adult Children About Money

Here you are, thinking you’re in the clear, and a child—maybe in a bind, maybe just going through a period of indecision or misdirection, or maybe because that’s simply what’s easier—wants a little more time with that roof over his or her head. 

And that’s not even mentioning everything that child thinks comes with that roof—the food, the laundry service, sleeping until 2 p.m., the free cable and Internet, and on and on. All the amenities of living at home with none of the rules (“I’m twenty-three! You can’t tell me what to do!”).

If only it were that easy—for your kid and for you. When it comes to creating wealth, protecting your wealth, and teaching your children about the responsibilities of life, setting boundaries with adult children is actually one of the trickiest areas to navigate. After all, you love your kids and want to support them and help them. 

None of us want to see our kids going through rough patches, whether it’s their fault or not. But we also know deep down that we’re not lending them any support to manage their lives in the long term if we acquiesce and give them a free ride in the short term.

I hate to give you a fist-pounding warning, but I will say this: If you don’t help your child fly the coop, you risk bankrupting your entire family—you in the present, and your children as they grow up. They need the appropriate skills to make them marketable, but they also need to be taught sound financial principles for how to deal with money when they start earning it (or, at least, trying to earn it). 

When you factor in the enormity of student loans (they outpace credit card debt), then you know that your kids can be in an especially tough spot as they prepare to go into the real world. Making the right strategies is more than necessary; it’s rather urgent, in fact.

The most commonly held vision for my clients has to do with this very subject. They want to be successful enough to fund a college degree for their children and then enjoy the satisfaction that comes from doing so, especially when that degree is complete.

I know every situation is different – and there are very good reasons why adult children may want to move in with their parents. In fact, it’s so common that a Pew Research Study found that about 48 percent of people ages 40 to 59 have given financial help to grown children. So my message here isn’t for you to put a moat around your home and ban your kids from knocking at the door with a few suitcases in hand. The goal here is to help get your kids back on their feet and teach them lessons in financial responsibility while protecting the family’s wealth at the same time. It’s about setting boundaries with your adult children, not cutting them out of the will. 

These are my strategies if you’re dealing with children who either want to stay longer than they should or want to move back after they’ve been gone for some time.

1. Talk Big Picture 

Okay, so let’s say your kid presents you with this question: “While I’m looking for a job—you know, the market is bad—is it okay if I move back into my old room?” Initially, your heart may warm up like a microwaved slice of pizza. After all, he’s your kid and you’d love more time with him. Yes, it’s wonderful if you feel that way, and I’m happy that maybe you can eke out a few more games of Scrabble, a few more dinners, and a few more of those precious moments that you thought were gone for good.

As is the case with many concepts I discuss, however, you can’t allow your emotions to dictate decisions. 

Why? Spoiling your child—at eight or 28—does him no good. You won’t help prepare him for the rigors, demands, and craziness that come with adulthood if you coddle him financially while he’s living with you. So in the immediate aftermath, you ask this question: “What are your goals?”

It doesn’t matter whether it’s going to school or getting a job or both, but there needs to be articulated professional goals (“What are you going to do with your life?”) and next-in-life goals (“What are you doing to get there?”). Even if your kid doesn’t know what he wants to do, he needs to have a goal for trying to figure it out. 

Why? Because with goals come accountability. With accountability comes maturity. And with maturity comes some semblance of taking financial responsibility. Once those goals are in place, that’s when you help your child with the next phase—a plan (“What are the steps you’re going to take to reach those lifestyle goals?”).

If you’re providing either shelter or assistance, you have every right to ask these questions and expect good answers. After all, what this really comes down to is parents helping their children—not with the wallet, but with the frame of mind it takes to get going and get started in life. That’s your goal here, right? get them out of the house, and get them going in the right direction.

2. Don’t Fear the Ultimatum 

In some cases, what works best is establishing a period in which you’re willing to help. For example, a realistic timeline may look like six months. As long as you give the expectations, you can enforce them and use those six months to help him get on his feet, offering suggestions about how to cut costs of living (like sharing an apartment with roommates).

I know using the word “ultimatum” sounds negative, but in the long run, you’re actually helping your child by establishing clear timelines and rules. Obviously, the trick here is that you have to be willing to enforce the boundary that you set, and that’s something you have to ask yourself: What will happen if you reach that six-month mark and there’s been no progress? 

I hope it doesn’t come to that, because if you employ the other principles here (by being a helper, not the evil enforcer), you can avoid that deadline day so that he’ll be on his own before that.

I have one couple as a client who had a good sense of what they spent in their lives, but not how to make their money last. 

Their real problem was they wanted to help their adult kids all the time. I had to look them square in the eye and say that wasn’t going to work (they were going to run out of their assets and have nothing to live on in retirement). In many ways, they needed to do the same thing with their own kids.

3. Come Up with a Financial Deal 

Of course, the reason why kids want to move back to live with Mom and Dad is likely not because you make a killer lasagna. It’s because the cost of living is either significantly decreased or nonexistent when they think they can have amenities like food and cable for nothing. 

That’s where parents with returning kids make their biggest mistake: They allow that to happen. You won’t teach financial responsibility if the only expenses your adult kids have is paying $10.99 a month for their Netflix subscription and $5 for their fancy cup of coffee at Starbucks. Establish boundaries with your adult children right from the start in terms of what they will be responsible for covering. 

Maybe you cut him a deal on rent. After all, he may be in an unemployed bind of some sort. But don’t forget you can now claim a $500 tax credit for a non-child dependent over 17, whether it’s your 27-year-old son or aged father.

While I won’t tell you what percentage you should charge for rent or other expenses, the bottom line is that you should charge something. That will force your child to look at expenses, search for jobs, get back on his feet, and prepare for the realities that await. I personally would recommend doing a small monthly expense for rent and a percentage of other bills to give a taste of what’s coming when your children are out on their own. 

That doesn’t mean you have to jam your kids up with ungodly costs, but you should make them earn some of their keep.

In some cases, I would even recommend drawing up a family-friendly contract to show the seriousness that you expect. Believe me, your kids are not going to want this, but they do need it. 

The greater good is that you’re teaching them that there’s no such thing as a free slice of lasagna out in the world. And even greater is the education you’re giving them. even if it takes six months to a year for them to become financially independent, that time when you’re setting expectations and teaching more financial principles will be money well spent as you prepare them for what’s ahead on their own journey.

4. Manage Expectations 

If you’ve established some guidelines for how your kids are going to contribute financially, you’re now ready to do the same in other areas. Maybe their cash flow really is lower than a riverbed in the middle of a drought. In addition to paying rent and other expenses, you can think of other ways to make up for expenses. 

How could they save you money in other areas, like yard work, handiwork, grocery shopping, or helping with computer-related tasks? You should also outline your expectations for house rules. 

After all, while you’re still the parent, you’re technically not really fulfilling the caregiver role anymore, so your kids may think that anything goes with drinking and socializing in your home.

If there are areas that are hot-button issues for you, you are well within your right to outline them upfront. That technically has nothing to do with your finances, but it has everything to do with setting up a system that allows you to be clear about any things that could turn into major conflicts down the road.

You can’t underestimate the change in family dynamics that happens when they move back in and change the vibe. The new habits (after perhaps four years away at college) may interfere with what goes on day to day. The point isn’t to say that there will be inevitable conflict, but that it behooves everyone to understand the house rules and that you have to work through potential tensions and conflict with honest communication and expectations. That’s why it’s good to set boundaries with your adult children as soon as possible. If they know what to expect, you can hold them to those expectations and start this new relationship on the right foot. 

5. Rethink Your Role 

One of the best things I ever read about parents assuming the role of caretaker for grown-up children after they thought their nest was empty was that you have to redefine that role, in that you should think of yourself as less of a manager and more of a consultant. I thought that was a wonderful way to think about your relationship. 

While you can establish rules, you don’t micro-manage every little step, decision, or action. Instead, you consult, assist, and morph into an advisory role rather than a supervisory role. Setting boundaries with your adult children allows them to see you as a collaborator, not a caretaker, providing the foundation for you to help them in ways other than just providing financial assistance.

6. You Are Not a Malfunctioning Slot Machine that Empties Coins Indefinitely

If you’re in a good spot financially, it may be tempting to slip your child $20 here, and $20 there. But if you want to teach your kid to create his own wealth (and protect your own), the International Bank of Momma and Papa cannot be open 24/7. That’s why those boundaries you set with your adult children early on are so important.

Do you feel like you have to lend money to help your child out of a jam? Perhaps you set up some kind of loan with interest. Or you set parameters. Maybe you will assist in reducing credit card debt, with the understanding that you will only do it one time. 

Some situations can be so complex that it often does make sense to bring in a personal wealth advisor to be an objective third party to help sort out issues and talk about decisions that are best for both you and your child. It also allows you to stay away from internal family and emotional issues that may arise in resolving these conflicts.

7. Use that Two-Letter Word: “No.” 

When our kids are toddlers, one of our favorite words is “No.” No, you cannot have a twelfth cupcake. No, you cannot put your thumb in an electrical socket. No, I’d really rather you did not do a somersault down the stairs and see if you can land in a perfect headstand. No, no, no, no. You do it because you know the long game is what you’re playing. 

“No” teaches boundaries. 

“No” protects them from harm.

The same holds true here. You don’t need to say yes to every request. When setting boundaries with adult children, it’s okay to say no, then explain why and talk about other options. 

No, I’m not buying a new computer for you. You’ll need to save up for it and you can use ours when you need it. 

You can’t have $20 to go out drinking with your buddies.

Please don’t turn the guest room into a doggie daycare for Great Danes. I admire the entrepreneurial spirit, but let’s think about more realistic options. 

It may feel harder to do as they grow older because your children feel more like friends than children, but “no” has the same goal as it did when your kids were toddlers. It establishes boundaries, keeps them safe, and teaches them how to take responsibility for their actions.

Final Thoughts

Parent to parent, I know the sacrifices you have made—to give your children what they want, what they need, and to have the opportunities that will allow them to grow up to be good people. In return, we get the satisfaction of knowing that we did a good job in teaching our kids to be contributors in the world and to their own families. Setting boundaries with adult children isn’t about giving them less, it’s about giving them more — in the long run, at least. 

For many of us, we have spent the better part of two or more decades putting our children’s needs ahead of our own. That’s just part of the job.

If you have to enter this part of your life that perhaps you didn’t expect, it’s okay to put your own needs first. While you will help, guide, and assist your grown-up children who are in need – or are a bit misdirected – you will do them a bigger favor if you don’t do what you did when they first tried to cross the street: hold their hand. 

Part of the trick of navigating this situation is finding that sweet spot between total care and abject neglect. It’s not easy and every situation is a bit different, but I do think that besides the strategies I’ve outlined here, it’s important to keep in mind that by taking care of your own needs, you’re actually teaching them how to do the same thing for themselves. 

You’re teaching them to be independent. That’s smart, not selfish.