CLOSE THE BANK OF MOM AND DAD
DO YOUR ADULT CHILDREN STILL rely on you to finance their lives and lifestyles? It is likely about time to close the bank of mom and dad.
One of the most important keys to your long-term financial security, as well as to the financial accountability of your children, is how quickly you eliminate their dependence on your financial resources as they transition into independent adulthood. This is especially important for “sandwich generation” families; these are families led by people who take on financial and care giving responsibilities for aging parents while simultaneously funding college and other expenses for their children. What is often neglected in this scenario is planning and saving for retirement. The more prepared children are to take responsibility for financing their lives and lifestyles, the more resources their parents can free up to see to other needs, including retirement savings.
While it may spark disappointment and even resentment, you need to be ready to close the bank of financing your adult children—for their sake and yours.
Here are three things to focus on:
1. Don’t Be Their Emergency Fund.
One of the first rules of money management is to create an emergency fund that is equal to at least six months of your household expenses. I call this the “income interruption fund,