When to Cut the Financial Cord on Kids: Are Your Kids Financially Dependent?

‘Kids will be kids’ is an old adage that many parents, including baby boomers and seniors are familiar with and find to be true. 

Some kids will try to remain kids who are financially dependent upon their parents, for as long as possible, but they learn parental limits and expectations, when taught properly. Of course, there will always be kids who tend to take advantages of their parents in different ways; financially, is just one of these ways.

“My wife and I cannot afford a vacation because we have to support our kids, as well as their kids,” a baby boomer or a senior might comment.

Naomi Mannino, from Bankrate.com offers some suggestions in her article, “When to cut the financial cord on your kids.”

Financial planners offer excellent advice for parents with children.

The following ten tips will enable parents to cut the financial cord on their kids at an appropriate time. Note that this age may vary from child to child depending upon their individual needs, abilities, degree of independence, ambition, academic pursuits, etc. Since no two children are alike or have exactly the same financial needs, wants or desires, it is usually up to their parents to determine the best time to cut the financial cord.      

Begin to teach your children the value of money, at an early age. This can prevent many financial problems later. Even young children can learn how to save money in a piggy bank. When it reaches a certain limit, parents can take them to the bank to deposit it. Learning about banking early is an important part of their education.

Give you children a regular allowance, for example a dollar per week for every year of age. Children should receive their own money on a regular basis, so they can understand and become familiar with handling money.

Teach your children good money management principles. All children need to know how to manage their own money in terms of setting up a simplified budget that they can understand and follow. 

Teach your children how to save money for the future. When children learn to save money on a regular basis, it becomes a good habit, as well as part of their lifestyle. Saving a percentage of their money allows children to see the merit in saving for a rainy day.  

Teach your children to place their financial needs before their wants. When children realize money goes toward needs rather than wants, they also begin to see that extra money earned can go towards their personal desires.   

Teach your children how to earn extra money by helping out at home and elsewhere. Children paid for helping at home, learn to assist their parents. Gradually, that desire to work for money will extend outside of their homes in terms of helping neighbors, or taking on small jobs for pay, etc.

Set a good example for your children by your own good money management. If you, as parents, are good money managers, you are likely to teach your children good financial management basics, also. Do you pay your bills on time? Do you curb unnecessary spending? 

Teach your children credit card and debit card management. Good credit card and debit card management can help your children to ensure their own financial futures. This may also prevent you from having to bail your children out of credit card debt, in the future. Managing debit cards properly helps prevent overspending.       

Sit down and do financial planning openly, honestly and regularly with your children. What you choose to do in terms of family finances is entirely up to you. In other words, it is your decision. Note that many teenagers will have higher financial demands than you expect and you may choose to meet them or not to meet them. Be firm in your decision making process, as there can be severe repercussions with respect to your own finances, when it comes to mismanagement of credit cards by teenagers.   

Gradually wean your children and teenagers from being financially dependent on anyone, including you as parents or grandparents, allowing them to take over their own personal finances, as soon as possible. Remember that the earlier you wean them from dependency or cut the financial cord with your children, even as adult children, the more you encourage their financial independence.     

While your kids will always be your kids, would it not be much nicer to be able to afford a vacation knowing that your kids are financially independent? You really do not want to be supporting them, as well as your grandchildren, when they are sixty years of age. It might be nice to have a nest egg to share with them, at some time.