How To Financially Cut Off Your Child Without Ruining Her
One of the toughest things you’ll have to do as a parent is officially kick your child out of the nest. Even if she no longer lives at home (which, by the way, might make her one of the rare independent millennials), she may still look to you for rent money, her phone plan, health insurance, groceries, and/or car payments. I know several people whose parents supported them either partially or entirely until they were nearly thirty. Yes, thirty. But don’t be so quick to judge those parents: like I said, cutting your kid off financially isn’t easy. All your child’s life, you’ve felt it was your duty to provide for her. So to say, “I’m not paying for the roof over your head anymore” can feel unnatural. But, believe me when I say that you’re doing them a favor. These thirty-something’s I spoke of who are just now financially independent—they’re frightened and they’re struggling. Their parents didn’t do them any favors by paying for their lives for so long. But they also made the change so abruptly, which wasn’t fair, either. Here are tips for financially cutting your child off without ruining her life.
Don’t spoil her to begin with
This step will have to start early, but don’t get your child accustomed to a lifestyle that she likely won’t be able to afford on her own when you cut her off—or at least won’t be able to afford for a long time. If your child is used to getting delivery food every day and wearing designer clothes, she’ll struggle to live below her means when you cut her off—and her means will probably be low to begin with.
Prepare for a serious guilt trip
Know that your children—though they are adults—may throw tantrums, accuse you of not loving them, call you a tyrant, and many other unpleasant things. Don’t let them guilt you into leaving them living on the bank of mom and dad. Think about it: do you want a forty-year-old son or daughter who is still not financially independent? If you don’t, well, the only change that you can control is you cutting your kids off. She may not happily go off on her own.
Tell her about your finances
Hey, your kid may not realize that you aren’t swimming in cash. Perhaps funding her life has put a serious burden on you. Maybe you’ve had to make cuts in your own life, in order to pay for your kid. If that’s true, she should know that, so she understands that this isn’t even personal—it’s just about money.
Whatever the change will be—maybe she has to start paying for her groceries or her own health insurance—give her plenty of notice. At least a month is considerate—but three to six months may be required for her to make the necessary changes (like getting a side job to cover this new expense).
Start with the small stuff
If you’ve been funding your adult child’s entire life for a while, you can’t just suddenly stop paying her rent. That’s a massive expense that she won’t be prepared for. First, pull the small stuff. First the phone bill. Then the car payments. Then the rent. Starting with the small stuff lets her gradually understand just how expensive life really is—it lets her wrap her mind around the idea that she’s been living in luxury by not having to pay all of this.
Assess her living situation
Figure out what your kid is making, and now assess her living situation. Her rent really shouldn’t be more than 25 percent—maximum thirty percent—of her take-home each month. So that’s take-home aka after taxes. She may need to move to a more affordable place if you’re cutting her off. Help her apartment hunt, so the change doesn’t feel so cold and lonely.
Sit down and budget with them
Your child may have never drawn up a true budget. If you’ve been helping her, she didn’t feel compelled to. But now that she’ll be taking over her own bills, you should really sit down with her, calculate exactly how much she makes, and find out what she can afford to pay on each area of her life.
Identify the areas of overspending
Perhaps it’s drinks with friends, travel, or delivery food. Look at your kid’s bank statements, Venmo transactions, credit card bills—the whole thing—and find out where they’re spending too much money. It can be hard to convince them to cut back, but give them examples of what that can result in. Explain to your kid that if she stops ordering delivery and makes all meals at home, she can easily save another $500 a month, and that that will amount to $6,000 a year. And that’s what she should be putting into a retirement fund each year, starting, like, yesterday, if she doesn’t want to work for eternity.
Help her research health insurance
If your child doesn’t get health insurance through her job, paying for it on her own is going to be expensive. She won’t know where to begin. Help her research plans, so you get peace of mind knowing she winds up with a good one—and one she can afford monthly payments on.
Pay her deductibles
Perhaps, if your child is taking over her insurance premiums (car, health, etc.), you can agree that, if an incident occurs, you’ll pay the deductible—maybe just for the first few years.
Encourage her to ask for a raise
Depending on how long your child has been at her job and how well she’s been doing there, it may be time for her to ask for a raise or at least a health insurance stipend. It may not have crossed her mind to ask her job for more money, since money was just coming in via mom and dad each month. Dig into her job situation a bit and see if it would be appropriate for her to ask for more money.
Give her gift cards on holidays
Don’t give her slippers or makeup or accent pillows. Give her hefty gift cards to the grocery stores and gas stations she frequents. That is really what she needs, and will help her out a bit.
Get her family deals
She may need an accountant, chiropractor, or other professional with whom you’ve had a long-standing relationship. See if your insert professional here will give your kid a little discount, since you’ve been a long-time, loyal customer, and she needs the break right now.
Give her savings incentives
If your child struggles to make the right decisions when it comes to savings (aka she goes to too many concerts and spa days), give her incentives to save. Tell her that you’ll match whatever she saves each quarter—or you’ll give her a fifty percent match.
Help them in negotiations
Whether it’s negotiating rent, negotiating car payments, or negotiating that raise, help your kids when these conversations come up. It’s one way you can be financially helpful, without opening your wallet. You have the expertise to help your kid pay less for that car or get a higher raise.