When to Land the Financial Helicopter

Kids, it turns out, need their parents even after they’re all grown up.

About 6 in 10 parents say they’ve helped their young adult children financially within the past year, according to a report released earlier this year from the Pew Research Center. The most common forms of assistance? Household expenses, cell phone bills and subscriptions to streaming services.

“Parents have always helped their children, but one of the real questions is, ‘How much is too much?’” says Anne Lester, author of “Your Best Financial Life.” The answer, she explains, depends on how much parents can afford to help, as well as each family’s parenting values.

To navigate the challenge of helping young adults achieve financial independence, money experts suggest these strategies:

Setting up young adults for self-sufficiency starts when they’re younger and still living at home, says Mindy Oglesby, certified financial planner and founder of Oglesby Wealth Strategies in Watkinsville, Georgia.

To help children become financially independent as adults, she says, “it’s important to help them with the mindset of making small sacrifices for something they want,” she says. For example, kids can earn an allowance by doing chores around the house.

Then, Oglesby adds, once they have their own money to manage, parents can show them how to apply a budgeting strategy and immediately put some of that money into a savings account for the future. They can also use a portion to buy something they want, like a toy. “It teaches them to set goals and work for things,” she says.

Rose Niang, CFP and director of financial planning at Edelman Financial Engines, says it’s also helpful to talk to your children about money steps you’ve taken for yourself, such as paying off credit card debt or saving for retirement. “These are conversations that can be sprinkled in anytime, and it will help them later,” she says.

As those kids become adults, living at home with parents is a popular way to delay bigger expenses. About 57% of young adults between ages 18 and 24 live with their parents, according to the Pew report. Most say they contribute financially to the household in some way. That can include paying for groceries, bills or rent.

Charging young adults to live at home is a good way to foster financial independence, Oglesby says, especially if the parent puts those “rent” payments into a savings account for the child to one day use toward their own home.

The ideal amount of “rent” really depends on each individual situation, she says, adding that “not everyone will be able to contribute,” and that’s OK, too. It can be a goal they work toward.

Instead of providing blanket financial support, Lester suggests assisting young adults with specific expenses, such as helping them make a down payment on a first home or covering food and rent while they are looking for a job or in school. “Because if you just have an open checkbook, nobody learns,” she adds.

Niang says it can also be helpful to focus on helping a young adult with their “needs,” such as food and housing, while letting them figure out how to handle “wants,” such as a new car or concert tickets, on their own.

Niang suggests setting and communicating realistic deadlines so your kids can prepare for when parental support runs out. For example, you could tell your child that as soon as they start their first real job with a steady paycheck, they will be taking over payments for their cell phone bill.

Coinciding with milestones, like a first job, helps greatly, Niang adds.

Elaine King, CFP and founder of the firm Family and Money Matters, says withdrawing financial support is easier on young adults if it’s done slowly. Parents might want to reduce their support of lifestyle costs from 100% to 80%, then 50% before getting to zero. “Don’t do it all at once so they can get an additional job or adjust,” she says.

Lynnette Khalfani-Cox, a personal finance expert and author of “Bounce Back: The Ultimate Guide to Financial Resilience,” suggests helping young adult children in ways that help them build their own wealth, a technique she calls the “wealth starter kit.”

For some, this approach can include purchasing property for children, which she did for her own kids. When her daughter was in college, she and her husband bought a condo for her to help her establish in-state residency for school. That helped keep tuition costs down while also providing her a place to live and an asset that grew in value over time.

“This investment strategy paid off in spades,” Khalfani-Cox says. It worked so well that she and her husband repeated the strategy with their son. She emphasizes that each child is different and some may need more support than others.

A similar but less expensive way to help adult kids build their wealth could be to help them set up retirement accounts and figure out an ongoing strategy for helping them grow.

One of the most important rules for parents is to first make sure their own finances are shored up before offering support to their adult children. According to the Pew report, 36% of parents who helped their young adult children financially in the past year say it has hurt their own personal finance situation at least some amount.