Cutting the Financial Cord: When is the Right Time?
As parents, we always want the best for our children and want to help them whenever we can. However, this line can get blurred when it comes to money, more specifically how long we continue to financially support our children. There is a fine line between “helping” and “enabling” that every parent should learn to recognize.
|Setting financial expectations can help your child learn how |
to manage their finances, an important life skill.
In a 2012 survey conducted by Vanity Fair and “60 Minutes”, 54 percent of today’s parents said there’s no set time for when kids should stop living at home. More concerning are the 26 percent of parents who have taken on debt and the 7 percent that have delayed retirement to help support their children.
We at Lincoln Savings Bank are parents that want the best for our children. One of the best lessons we can give our children is teaching them how to manage money wisely throughout their lives. Here are a few ideas to help your children become financially independent:
- Set the expectation early that if your child wants something besides the basics you provide them with (food, clothing, shelter, etc.), they need to help earn part or all of the cost.
- By age 16, encourage your children to have a part-time job. Not only will this provide them a way to earn money, it will also teach them work skills at an early age.
- Kids that are 18, not in school and living at home should be paying rent. You can also work on a plan with them to facilitate moving out within a certain period of time.
When it comes to things like a credit card or health insurance, it’s okay to stay connected. You can keep your child on your health insurance until 26 if need be, and they can also be an authorized user on your credit card. The biggest thing to remember is that you’re trying to set your child up for success, not handicap them. Lincoln Savings Bank can help with their financial independence by helping set up a checking or savings account for your child to use responsibly, so see us today!