The goal of a parent is to raise children who can learn to take care of themselves personally and financially.
Sometimes we don’t succeed.
More than 75% of Americans are still paying some or most of the debts and bills of their adult children. And almost 18% of adults between the ages of 25 to 34 are still living at home with their parents.
Children need help and guidance. But once they become adults, they need help and guidance learning to be independent, not dependent.
Here are the benefits and drawbacks of paying the bills and debts of adult children.
Benefits
They will always be your child, even when they are grown up. The term “growing pains” refers to the trials, tribulations, and mistakes that children must endure and learn from to mature.
Unfortunately, financial literacy and maturity are not genetically inherited, no matter how much we wish for it. The tragedy of being a child is that the only way to learn how the world works is to make mistakes.
And some mistakes, like bad credit or bankruptcy, can have consequences for your child that lasts for decades.
Paying your adult child’s debts could help keep them out of financial trouble that they won’t easily get out of themselves — if you keep it within certain limits.
The fastest way to get your child not to listen to you is to say “I told you so!” when they mess up.
If you are in the habit of paying for your child’s debts, you could make it with the caveat that they must learn personal finance practices from you.
You could teach your child how to make a budget, balance a checkbook, and prioritize expenses so they won’t get into more financial trouble in the future.
Family relationships can be torn apart over petty misunderstandings and arguments. Many are irrevocably torn asunder over money squabbles.
The path to financial independence is paying off debts, making shrewd investments, generating multiple avenues of income, and keeping money in the family to financially strengthen it for future generations.
Teach your child that a family is stronger if everyone is financially literate and responsible when you help them pay their bills.
Downsides
On the other hand, helping pay your adult children’s bills has many drawbacks.
Children learn how to ride a bike by falling off, skinning a knee, getting back on, and trying again. You can’t run behind them holding their seat or leaving the training wheels attached forever,
If you continually pay your adult kid’s bills and debts, they may never attain financial maturity. Worse, they may just become more dependent upon you and decide you will always be there to save them.
Almost 3 million senior citizens defaulted on their student loan payments between 2005 to 2015. The outrageous fact about this estimate is that senior citizens have mostly defaulted over the non-payment of tuition for their adult children and grandchildren, not themselves.
As a result, millions of retirees are seeing their Social Security payment be garnished to pay back their altruistic debts.
Paying off your adult child’s debts can delay or ruin your own retirement plans. You could end up scrapping them completely and end up working longer in life.
