I read recently that 30-year-old man was court-ordered to move out of his parents’ house. Wow.

While most people will never have to take legal action to get their adult children to leave home, this story highlights a troubling statistic from the Pew Research Center: at least one third of adults ages 18-34 live with their parents. This is the highest it’s been since the 1940s.

A full 50-60% of this age group say they receive at least some financial help from their parents too. Yikes!

So, how did we get here? Most analysts say the Great Recession accelerated the trend and then the combination of the pandemic and the rising cost of both housing plus everything else of late didn’t help either. It’s a problem. A generation that should be channeling more of their income into retirement savings are supporting their kids later in life, while young adults are failing to develop crucial financial management skills.

Look. It’s a time-honored tradition for parents to help their children get a start in life, but giving too much help for too long can set up an unhealthy pattern of dependence and expectation that’s hard to break. It also leads to emotional tension and dysfunction, as the news story illustrates.

Avoiding the financial and relational pitfalls of this scenario doesn’t call into question whether you should help your children, but how you should help. If you know you need to help your adult “kid” transition to financial independence but you aren’t sure how to do it, here are some practical tips.

1. Have the Conversation: Expectations and Conditions for Financial Support

Parents can’t assume that their children will know when they are expected to be moving out, get a job, and start paying for various personal expenses. It’s important to get these expectations and conditions out in the open and then ask (and listen!) to what they’re thinking and expecting, too. Some kids just need a gentle nudge and a little help understanding that adult privileges come with adult responsibilities. This conversation doesn’t have to be too intense or scary — it’s simply a starting point.

2. Set a Transition Strategy for Withdrawing Financial Support Gradually

Along with clear expectations, young adults need a clear transition strategy. While some parents adopt a “sink or swim” mentality, most young adults simply aren’t prepared to go from complete dependence to total independence overnight. Realistically, it could take anywhere from one to two years to fully transition. Start by setting deadlines to stop paying for smaller expenses — such as groceries, gas, car insurance, or cell phone bills — as your child becomes capable of paying for them. This strategy builds their experience in handling their own finances as well as their confidence.

3. Make Them Articulate Their Plan and Help Them Stick to It

Young adults have dreams and goals, but they don’t always know how to get there. Brainstorm with them and put it all in writing, prompting them to consider aspects of financial responsibility they forget or underestimate. If they’re searching for a job, create a spreadsheet of their efforts and check in to make sure they’re moving forward. You shouldn’t be doing it for them, but some kids need encouragement to persevere and stay on task.

4. Support Them in Other Ways

As you withdraw financial support, find comfort in looking for other constructive ways to help them. There are many things that will benefit their financial health and sense of independence. For example, you could help them create a 50/20/30 budget that balances bills, savings, and spending. You can also assist them with honing their resume and job search, find free financial tools, or connect them with a credit counselor.

5. Set a Good Example

Children watch their parents for cues in every area of life, and that includes finances. As you set financial expectations, make sure you’re modeling good financial habits too. When your life displays the rewards of wise financial management, it will be that much more motivating for them to follow your advice.

6. Continually Re-assess Their Situation

Things seldom go exactly the way we plan, and transitioning a child to financial independence may be one of those things. If your adult child isn’t hitting the milestones you’ve established, consider the reasons and circumstances and be willing to re-assess the situation. It’s not bad parenting to help them through an emergency or give them more time if they’re “failing forward.” On the other hand, it might be time to pull back and let them flounder a little. After all, some of the best lessons in life come when we’re forced to make tough decisions or step out of our comfort zone.

Tagged as: Kids and Money, Money Management