This column is the second of a two-part series addressing the financial support of adult children.
“I can’t afford it” is one of the most powerful phrases in the English language. It causes people anxiety, discomfort, shame and everything in between. How do you — the adult child taking financial help from your parents — react to it? Probably not very well.
I’m not going to split hairs — you can’t afford your lifestyle. It’s prudent to find both the cause of your financial shortfall, as well as a solution. Unless your expenses and your lifestyle were literally forced on you, you are why you have expenses you can’t afford. Now, for the solution. How can someone who doesn’t earn enough to cover their basic expenses create a financial solution out of thin air? Well, you are both the problem and the solution.
I’m always terrified to hear the answer to “why should you make your financial problems, your parents’ financial problem?” Despite having deployed the question hundreds of times, I’ve yet to hear an answer which is indicative of an $80,000 diploma. Your financial problems are your financial problems. Your problems are not your parents’ problem, not society’s problem and certainly not the government’s problem. The longer you deny whose problem it is, the longer it will remain a problem.
There are three common reasons why adults consistently seek financial support from their parents: student loans, poor financial decisions and emergencies. The first two scenarios warrant you immediately cutting yourself off from your parents, while the third scenario requires a plan.
Student loans are likely to be a factor in your current financial conundrum, but not how you think. Sure, you may have tens of thousands in student loan debt which have you in a cash-flow crunch, but it’s the lifestyle those loans created back in college that speaks to the heart of their damage. Every late-night pizza, every spring break trip and every semester in Europe was “afforded” on a bed of lies. You couldn’t actually afford those purchases, but you made them anyway. Thus, any decision that seems relatively better than those decisions seems reasonable.
I’ve come to the conclusion that asking 18-year-olds to commit to tens of thousands of dollars of debt, without a job, income or assets, is among the stupidest thing modern society does. When you have no concept of money, what’s the difference between borrowing $20,000 or $50,000? You certainly know there’s a difference now, but you didn’t when you were 18.
Student loans can convince you that money doesn’t matter. Debts tend to do that. You get the benefit of the purchase without having paid for it. Obviously, this idea isn’t limited to student loans.
About 12 years ago or so when I was a financial adviser, a firefighter client of mine was pleased to welcome his son into his engine company. This was a proud moment. About six months into the new gig, the son asked his dad to help him pay off his $6,000 of credit card debt. The father, full of pride, but not full of money, gave his son the money. The father called this money a loan; the son called it something else.
Three months later, the son showed up to the firehouse in a brand new $36,000 pickup. It came with a $580/month payment. In essence, the father’s willingness to pay off his son’s debt was rewarded with his son buying a $36,000 truck. The father was upset. His feelings worsened when he was hit with a $10,000 medical bill two months later. Meanwhile, the son was already racking up more credit card debt. The $6,000 loan/gift/whatever fractured their relationship for years.
When your parents give you money to support yourself, every french fry, beer or sandwich you consume is not yours to consume. That’s your mom’s beer, your dad’s french fry and your mom’s sandwich. Every song you download, every movie you watch, every mile you drive belongs to your parents.
Of course, there are exceptions to my hardline stance. Your financial struggles may be the result of an emergency. If this is the case, you still owe it to your parents to put together a plan to become financially independent. As a parent, I would dive into just about any situation to save my kids, if they actually needed it. That’s the distinction.
The problem isn’t limited to recent grads. All over America, parents are supporting their adult kids’ families. How can a 50- or 60-something person support an adult child, their kids and have a chance at retirement? They can’t. You're ruining your parents' financial life. And you’re arguably ruining your financial life. Your parents' financial assistance is so challenging that you’re likely going to be forced to support your parents, once they no longer can support you. That’s not a hypothetical.
Your parents want to cut you off but are afraid to. You have to be the adult. It’s not good enough to stop asking for money. You must also tell them you don’t need their money anymore.
Peter Dunn is an author, speaker and radio host. Have a question about money for Pete the Planner? Email him at AskPete@petetheplanner.com
