A recent study in USA Today found that “65% of parents give their adult children (ages 22-40) some kind of financial support” to the tune of $178 on average per month. However, not all of these parents can easily afford this support for their adult children.
Yet the parents providing the funds “feel their adult children need support due to the economic climate,” whether for groceries, housing or a phone. If you find yourself in this position as a parent, here are 5 budget tips for supporting your adult child:
- Lay out your expectations. Make sure your adult child understands what they must do to continue receiving your financial support. Whether it’s abstaining from drinking or subsidizing their cost of living as long as they remain employed, make it clear that your support is not unequivocal.
- Specify your terms. Be clear about what’s involved with your financial support. For instance, how much money will you give them and for how long? Will any of this need to be repaid? Also, try to determine the use/purpose for these funds upfront, whether it’s for a vacation, groceries, hobbies or anything else. Will you require receipts or other proof of how the money is spent? The clearer you can be at the beginning, the better.
- Use autopay. Transfer funds on a specified day each month, and only once a month. To keep your budget and finances running smoothly, make it clear there will be no additional funds available unless there is an emergency and that what qualifies as an emergency is defined upfront.
- Take advantage of rewards. When possible, have your adult child use a credit card with points to pay for expenses like gas, groceries or even their rent. This makes it easier to track their spending and you benefit from the accrual of points which you can apply for something like travel.
- Sign up for family plans. Take advantage of family plans for things like cell phones or streaming services when possible to qualify for group rates and more favorable terms. This will save you money overall, and you won’t have to give your adult child cash (particularly helpful if they’re not good at managing their money).
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