Central Bank of St. Louis

  •  A smart pig on a stack of books
  • Is it time for your child to start supporting themselves financially?

    When your child was born, everything changed. You were granted a wonderful gift—a gift that keeps on giving. Or rather, a gift that keeps on taking. You love your child, but you might not have been expecting to shell out a weekly allowance when they are 26-years-old. It can be hard to cut off your baby. But the fact is, they’re not a baby anymore, and they need to start taking care of themselves. They might not want to hear that. Follow these steps to guide the conversation and soften the blow.

    Adult son and father sitting and talking on couch

    Tell them about your finances.
    It could be that the reason they continue to ask for money is that they are blissfully unaware of your financial situation. Sit down with them and be open and honest. No one likes to talk about money, but if your child sees concrete figures, it may help them better understand why you're about to drop a bomb on them.

    Ease into the idea gently.
    They may not be a literal baby anymore, but, unless you present your cause calmly and empathetically, they might still throw a tantrum. This will be a shocker to them, especially if you jump into it right out of the blue. Try not to get frustrated, and ask them their feelings about the situation, as well.

    Set a deadline, but include other milestones.
    It might be good to make this a year-long process. Take away things gradually. Prioritize what they need the most help with, and take away the least necessary things first. That means it's time to cut out the monthly spending money. In two months, they'll have to take over their cell phone bill. Save the big ticket items like student loans for last. They'll need some time to cope with the reality of that one.

    Offer them support without offering them money.
    They need a pet sitter? You're there. Financial advice? Absolutely. A shoulder to cry on? You can do that. One thing you can't do is give them more money. They're going to have to come to terms with that. Make sure you're there for them for everything else.

    So, you don't want to cut them off just yet. Here are some things you should avoid at all costs.

    • Big down payments
      • If they need help putting money down, they probably aren't financially responsible enough to make later payments. You might end up paying more than they originally propose.
    • Business endeavors
      • Dreams and goals are wonderful. What's not so wonderful is investing in an idea that has only a 50/50 chance of surviving after the first five years [1].
    • Funding bad habits
      • Make sure when your giving your children money, it's not going towards things that might end up hurting them in the end.
    • In the end, giving your child handouts isn't good for you or them. They need to learn how to manage their finances responsibly, and you need to start saving for retirement. Start preparing today to discuss this life change with your children today.

      [1] Frequently Asked Questions, U.S. Small Business Association



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