LIVING AND WORKING in Beverly Hills, I’ve become all too accustomed to fashionably clad twentysomethings styling down Rodeo Drive, cell phones pressed firmly to their ears. Arranging a business meeting? Perhaps. Arranging another “loan” from Mom and Dad? More likely. Not to disparage today’s young people, but too many have come to expect their parents’ unequivocal support, financial and otherwise. Blanket approval and a blank check.
As an investment adviser, I hear parents’ incessant lament: “When will my kids start pulling their own weight? When will they stop coming to me with their hands out?” The answer is as simple as it is difficult to employ. Kids do what we teach them to do; when we start saying no, they’ll learn to take no for an answer–perhaps not immediately, but eventually. The temptation, of course, is to continue supporting them in the affluent style in which they were raised. Why make them wait to inherit, after all, when helping them now would make their lives so much easier–and allow us to forgo the discomfort (and, perhaps, the guilt) of seeing them live less comfortably than we would like? The pretty paradox, though, is that coming to their financial rescue before they have had a chance to test their own mettle may lead our children to believe that they can’t succeed without our help. This is particularly true for those who have recently left the nest. A small allowance or monthly stipend may offer an appropriate helping hand, but too much might well be interpreted as an implied vote of no confidence.
A better approach would be to treat our children as the responsible young adults they are, or should be. Establish, or reestablish, firm ground rules and expectations. In our family, for example, college tuition is paid in full by Mom and Dad, but after graduation our children are expected to work for a living and pay their own way. We’re here for them in case they need a hand, but not if they want a handout.
More important than the actual dollars, of course, is the attitude and belief system that we parents adhere to in educating our children financially. If we convey a sense of willingness to help but an unwillingness to play Daddy Warbucks ad infinitum, they’ll get that message. A client once complained that her 32-year-old son thought nothing of asking her for several thousand dollars every month. Born and bred in the lap of Bel Air luxury, he considered it his due; I considered it chutzpa par excellence! When I suggested that she institute a “no more money from Mom” policy, she was appalled. As unhappy as she was with the situation, my client was unwilling to change, so he didn’t have to. She stayed angry; he stayed dependent and irresponsible.
This is not to imply that parents should throw their kids out there without a net. When your children were growing up, you taught them the rudiments of money management–how to balance a checkbook, how to use a credit card judiciously. Now that they’re on their own, help them formulate a reasonable budget and stick to it. Discuss what monthly expenses may total and suggest ways to cut back if their income doesn’t match their outgo. In some situations parental assistance may be a necessity–for example, few young people can afford their first apartments without at least some help from their families. But if you lend a hand, be sure to stipulate in advance how much and for how long. As a financial professional and a parent, I am disinclined to supplement my children’s income unless they demonstrate a sincere and quantifiable commitment to economizing (show me the numbers!). If they are truly budgeting intelligently, but their salaries still prove insufficient, I would agree to help–modestly and for a finite period. The issue, of course, is one of proportion and perspective–as it is in all aspects of life. And teaching our children well in this regard is truly a gift that keeps on giving.