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Helping Your Kids Financially May Actually Be Harmful

June 21, 2016 by Jennifer Clark

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Our kids are our world. We want to do whatever we can to help them and see them succeed, but sometimes, parents can overdo it. An online poll discovered that practically 60 percent of parents provide their adult children who are no longer in school financial support. Additionally, 65 percent of young adults say they feel they’ve experienced tougher financial hardships than prior generations.

Fifty percent of parents say that they have helped their adult child with housing payments. The online poll also showed that over 40 percent of parents have helped their adult children with living expenses, transportation costs. Where does the financial help end?

Watching your kids go through hard times with money is difficult, but there is a difference between helping them and hindering them. Helping your kids financially may actually be harmful, depending on the situation. Instead of always bailing them out or taking on some financial responsibilities for them, here are some things you can do:

Teach them the value of a dollar.

Yes, you have probably heard this before, but instead of giving them money, teach them how to save and how to budget. Educating them about finances will be much more beneficial than handing them the amount they need every time. Offer to match the amounts they save throughout their years in high school and college, which will help to encourage them to not only start saving early but continue saving as well. Putting funds aside will become second nature to them, which will help to pull them out of sticky situations in the future. You can start these lessons early so that as an adult, they are prepared and knowledgeable.

Open a 529 account.

A 529 is a tax-free education savings account that is designed to specifically save funds for future college costs. These work similarly to a 401 (k) where you can continue to contribute funds regularly. If you still have a little one on your hands, you may want to see if family would give cash for this account instead of buying a gift. Check to see what your state regulations are on these accounts and how they work for where you live here.

Guide them in their future.

Communicate with your kids on what they really want to do in their future. A four-year college is not meant for everyone, nor for every career. There are plenty of careers that do not require or do not need four years of schooling. Helping to prevent them get into unnecessary excessive debt will be one of the many ways you can assist them without hindering them. Be supportive and guide them along the process. Keeping that communication open about finances will be detrimental for their future in more ways than one.

Set limits.

If your child does come to you for financial assistance or even needs to move back home due to money struggles, be sure to have an open conversation right away about what you will and will not do. Include your expectations and develop a timeline with them. You may want to also give them some goals you would like them to achieve to help keep them on track. If possible, charge them rent as well. Allowing them to live without any expenses can be extremely harmful to their future.

Get them a job.

If you see your son or daughter is really trying to acquire a job but is having a difficult time doing so, you can use another type of resource other than money to help them: your connections. Use your network to see if you can find them a job, ideally in their field of study (if applicable). Any job will be helpful, though, for their financial situations.


Helping your child financially in times of trouble is not a negative thing to do; however, you do need to recognize the other ways you can help them without directly bailing them out every time. This is not to say you should never help your kids. You just need to set boundaries. They will come to rely on you more than they should for money, and as a parent, there needs to be a time where tough love is enforced.

What would you add to the list? Have you experienced this yourself?

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