Episode 31 — Financial Umbilical Cord or Lifeline?

We all want our kids to thrive. But when you financially support an adult child, are you helping or hindering them?

Today, Danielle Howard shares tips on how to handle financial situations with your adult children. Focusing on the word “respect,” Danielle provides seven useful tips to help you decide whether you’re helping or hindering your adult children.

In this episode, you’ll learn:

  • The importance of having respect for not only your children but also yourself
  • The importance of helping yourself before others
  • The difference between providing for ego needs versus soul desires
  • Why struggle is necessary and failure is okay
  • The dangers of entitlement
  • And more!



[00:00:02] Welcome to the Wealth Done Differently Retirement Podcast. Danielle Howard a certified financial planner shares insight into the financial tools techniques and temperaments needed to make the most of your retirement dollars and relationships. Danielle bridges the gap between Wall Street and Main Street bringing complex financial topics down to earth. Danielle will educate and inspire you as you define and refine your version of prosperity.

[00:00:35] Hello and welcome to Wealth Done Differently Retirement with Danielle Howard a Certified Financial Planner. Today the podcast is titled Financial umbilical cord or lifeline. Daniel’s going to cover seven tips to help you decide if you’re helping or hindering your adult children. While this is a pretty heavy topic today yes it is.

[00:00:55] It is.

[00:00:56] This could be sensitive for some people out there that are listening right now that have adult children.

[00:01:01] Well I have adult children and now a grandchild and I know you have some adult children. I do.

[00:01:10] And grandchildren. Yeah absolutely.

[00:01:12] And this is an area that I know my husband Mark and I have struggled with over the years how to help best financially assist or not assist our, our kids as they take on adult thing. Have you guys found it challenging?

[00:01:29] Yeah it can be because you know you get to a point where you, you want your children to prepare as well as possible through their high school years and then in college and, and hopefully find a job right away that helps them bring in the income that makes them successful. But today’s day and age it’s not easy that even with a college degree to get out there and find a job that’s going to pay those bills right away and how much help do you give your, your adult child so it’s not a, a crutch. It truly is just a hey we’re going to help you get by until this point or setting up those parameters can be so difficult and there’s I don’t know there’s a lot of second guessing involved.

[00:02:05] Yes. And you know Marc and I have a blended family his mine and ours. So are the complexity of our financial situation is is broad and deep the relationships and how they’ve played out over time has has been challenging we’ve tried to learn from our experiences and you know have we done it right all along the way. No I think it’s been really important to cover ourselves and others with a lot of grace and knowing that none of us is going to get this this perfect that we need to you know when we do get it wrong ask for forgiveness and try to focus on mending relationships to the best of our abilities. And you know I’ve worked with a lot of clients through a lot of this stuff which, which leads me to mention that I for my listeners that I, I hope you get some insight and you can glean some wisdom and insight about this, this topic. I feel it’s really important that you take what I say and apply it to your own life and take a look at where you can bring in other other professionals and talk a talk deeper about any of these topics that your financial situation in your life is unique and and deep and broad and and make sure that you’re working with folks that want to get to not only know you but your family and and what these different dynamics are. As you can better understand how you can use these financial tools in ways ways. So as we we put that little bit of a disclosure aside and start digging in then to add that this is the heavy duty one.

[00:03:59] Yeah and if you’re listening to this again understand that we’ve already established Danielle and I are both in that in that situation right now we’re where we’ve been there or are going through it and it is a personal thing. And if you’re finding this a little bit tough to hear or tough to listen to it’s understand it’s not a judgment issue it’s just this is life. This is where we’re at. Wherever you’re at is your own thing. And that’s why she’s saying get some professional advice some thoughts and and if you don’t have a professional already I know Danielle is available to talk about it cause she’s in the midst of it as well. So it’s a it’s life. That’s it.

[00:04:33] We’re doing life together together. Exactly. Absolutely. You know this is a podcast focused on the rewirements season so we’re talking about adult children. I get questions all year all over the place though how do I deal with my younger kids and teach them about good you know money habits that that’s a whole different conversation that today we’re just talking about our adult children and how to relate financially as as best possible with them. Mm hmm. A personal mindset around this is that we need to make the best decisions possible at any given time in a variety of life circumstances and that we need to start with a foundation of respect. Both of our adult children and of ourselves like you mentioned Aric. We want we want our offspring to be happy and healthy I don’t think any parent out there wishes ill for their children. We want them to be capable and self-determined. We want them to make positive contributions to society and feel good about their life and choices. I and I totally get that. For some people there they have children that may have health issues or mental issues that prevent them from being fully engaged. You know in their lives and those are outlying situations then we can at some point maybe discuss them a special needs stress or you know aspects around around that but this is kind of focused on you the kids that are capable and able to live fully and intentionally with it with their lives. I think it’s also really hard to watch our children struggle with life circumstances or consequences of poor choices that they make and we all want to have good honest forthright relationships with our children and money is one of the biggest wedges that can come in between you know come between us and in a variety of ways.

[00:06:41] Yeah I. While you brought a memory back to me big time because we don’t want our kids to struggle but I remember when I was in fourth grade we had a school project and it was all about monarch butterflies and my, my teacher had actually gotten some through the mail I suppose but she’d gotten some, some caterpillars that were already in their Chrysalis.

[00:07:03] I think if I remember that the term correctly my fourth grade teacher would be brought up. That’s correct. Don’t tell her if it’s not what is we’re going to talk about. Yes. Oh good. Yeah. So I remember that there was a couple of us that were we were around one of the chrysalis isn’t that a butterfly was trying to emerge and the teacher wasn’t around at that point and we were trying to help the emerge. Yeah.

[00:07:24] And it was a bad thing because as you try to help your actually we ended up destroying the butterfly not not physically touch them but the whole point of the struggle of getting out of that cocoon or that chrysalis is so that the body is shaped and the the the blood and other stuff and all of the other stuff is is force loaded until you wing it. Yes it is forced into the wings so that the wings can work in that butterfly can then fly on its own. And I think as a parent it’s so hard to see the times that were overstepping our bounds by helping too much and removing too much of that struggle from our children. So then not learning and they’re not growing their own wings but that was a lesson I’ll never forget because I mean I felt so terrible that that butterfly will never develop and be able to survive on its own.

[00:08:13] Thank you for sharing that. Yet is power. That’s great great imagery to carry us through when making financial assistance decisions with our children and well we’ll touch base on that a little bit further on to. But that’s that’s part of that respect you know as, as I age I want my children to be able to walk alongside me emotionally engaged and supportive. I don’t want them to be financially burdened you know because of choices I made early on. And this requires Marc and I to plan and prepare as best possible which is going to have financial implications on how we’re able to assist our kids you know so respect is honoring a person’s life journey and understanding that you know we want to provide a conducive positive environment for them to unfold their potential and that there’s no set process or protocol for what this looks like in each individual person’s life.

[00:09:19] And this again is where money sometimes is such an easy answer and we could just try to throw money at things because it’s tangible, it’s something that we can quickly go to and we need to be very very very careful with it.

[00:09:37] Yes absolutely.

[00:09:38] Today we’re going to look at my respect acrostic to help you think through how you want to handle your financial. How you may it want to assist or handle financial situations with your adult children and work with me. Here’s those we go through. Respect RESPECT.

[00:10:02] And we can all hear the song play theory head right. So again start with R and I want to look at that as our resources. So the first thing we want to look at is do you have enough for yourself.

[00:10:18] And defining that.

[00:10:21] How do you decide how much is enough? Have you planned for you know your end of life care and how you want to facilitate this aging process of the you know the go go years the slow go years then that the no go years. And if you have not discerned how much you need and what is your plan you need to stop.

[00:10:46] And if you do not know that you have enough for yourself are uncertain in any area of this and you are contributing to your kids financial situation right now and in any way shape or form just stop.

[00:10:59] And take a deep breath and take a look at your resources. You know when we get on an airplane and we have all heard it a hundred times if not more that put on your own oxygen. You know I put on your own oxygen mask first before assisting others is you. You don’t take care of yourself. You’re going to be sleeping on your kid’s a sofa somewhere down the road or you’re gonna be putting them in a situation where they are burdened possibly at a time of life where they need to be focused on their own families. So first of all take a look at your resources. What do you have? How are uses. How. Yeah. What are all the different moving parts? How do you make sure you are optimizing them?

[00:11:44] If you do have the financial resources to assist you’re gorgeous progeny as you had your best years continue to listen.

[00:11:53] You can listen on anyway but this is the the next of all these six suggestions are based on if you have determined you have enough resources for yourself.

[00:12:04] The next one we’re going to look at is ego desires. So R E ego desires if you are financially assisting your children how are they using that money again. It is up to you to be a little discerning here it’s none. You know it’s not about control. Get into that in a minute but we are to provide for our children you know clothing food shelter and an environment that is conducive for growth. And as they age and move into adulthood they should be able to provide those things for themselves. Unless there are outstanding issues. But if you are financially assisting them and the, the media is coming at them in every aspect of life saying you need to do the latest greatest you need to have this you need to do that. And I get making ends meet today is not easy but it is doable. And if you are creative and resourceful and building on your character assets you.

[00:13:12] You can make it happen. It may be hard but you also want to look at your own ego. Are you doing things for your adult children financially helping them out because it’s a reflection on you?

[00:13:28] Do you need to keep up appearances and you know are you assisting your children in order to be a reflection of your own self. And this is a again this is a self-awareness that may be a bit hard to swallow sometimes. But if, if you are you know assisting your children financially based on oh they need to have the latest cell phone or they, they need to have this car they need to have this roof over their head and it’s a reflection on you or you are helping them to live above and not respecting them and being able to live their own lives in the way that they have created an environment for it’s something for you to take into consideration.

[00:14:21] Yeah absolutely.

[00:14:22] On the flip side of that we look at soul needs. Assisting a child with a social need could look like helping them get a business started.

[00:14:34] That is based on their their passion. If they have a well laid out business plan if they’ve really done a lot of research if they are gifted in an area that you could really see them excelling at it could be investing in their continued education or in a lifestyle situation. For example if your your child has entered into the ministry or is a missionary and they need some assistance and a lifestyle living in a foreign country and this is a you know feeding their soul. This is an area that it probably would be beneficial for you to look at financially assisting them. It is a very very fine line and requires you knowing your child really really well. It would require deep communication and discernment and a willingness to to have conversations about about money what their needs are for how long. Is there accountability asking lots of questions around you know why is it. Why do you want to do this why do you need this Why. Why is this important to you. It involves time. There may be other professionals that need to get involved here but it’s a very very different environment. Providing for soul needs versus ego desires.

[00:16:03] Yeah and I think that it’s it’s so difficult for us as parents sometimes to have those conversations because I think we’ve all seen that we’ve all seen the singing shows right where the tryouts on the air and you get somebody in there that is completely tone deaf and they’re there a terrible singer but yet they’ve been surrounded by people who have told them you’re awesome this is great You’re fantastic. And then they get in front of somebody who’s just going to tell them the flat out truth and it’s a train wreck. Yep. I can see that happening with our children we want. We don’t want to crush their soul desire or their you know. I’m using air quotes their sole need but really if it’s not in line with who they actually are by how much you know your children and like you said you’ve got to know them and you have to have those heart to heart conversations they may want to start a rock climbing business because you know I’m in Colorado. This is the perfect place for it. Well son I love you but you hate you’re scared of heights. How’re we. How are you gonna accomplish this goes back to that business plan that you’re talking about those things. It’s hard to have those conversations Danielle how would you suggest a parent has that conversation or do you have any resources or do you know what resources they could use to help them initiate that conversation.

[00:17:16] Well I think that the why question is is really good. And you know again building a network a team of advisors and you know whether it’s accountability partners but you know you want to look at you know does your child or adult children just call him child that does the adult child have you know talent in this area. If they don’t have talent and they want to start something you know it’s a heart to heart. You know let’s let’s play this out.  Are you willing as the parent to allow them to fail. Yeah. Again I think we as parents tend to we can want to rescue our children and not allow them the learning experience of a failure. You know so weighing is this failure going to put my financial circumstances in peril or is this a reasonable place where maybe they don’t have the talent but this would be a good learning experience and I’m willing to invest this very much for it to be a learning opportunity. But how far do I let it go. You know that is that is the challenge and this is where you want to be playing this out. You know if I have a client come in and they’re saying I want to you know invest in my my child. I actually do have a client who has his fun. His son is now in the investment world and he’s involved in a hedge fund and he’s coming up with all these latest greatest investments and this gentleman is wanting to invest in his his son’s business.

[00:18:59] And I’m going OK let’s play that out a little bit. What is the worst thing that could happen if you lose all that money. You know. How are you going to go about me and what does this conversation look about about why you’re wanting to do this. You know it obviously isn’t about I want you to get me a hundred percent rate of return on my investment he’s wanting to do it to be supportive of his son. But you know. This conversation and play it out a little bit.

[00:19:30] I don’t think there again there’s any easy easy answers but the more you can build your network of support have more conversations about it the better off you’re going to be.

[00:19:43] Yeah absolutely. Absolutely. All right what’s the next tip.

[00:19:46] The next one is P. P is for pain. Pain in the process. You know how much financial pain is needed to facilitate positive growth. This is all about boundaries about tough love about understanding that the struggle is necessary that you know elements of financial struggle are okay. George Kinder wrote a book Seven Stages of money maturity and incorporates this is one of the stages as is the stage of pain and you know your story earlier about the butterfly emerging from the chrysalis is is perfect. Same one with the baby chick coming out of the out of the shell.

[00:20:29] We as parents so desperately want to help either peel back the chrysalis as their peel back the shell and help them get out to their full potential. But when we do that we’re actually impeding their growth. We’re keeping them from, from fully becoming what they are.

[00:20:46] But what needs to happen they’re so understanding that this struggle is necessary that that failure is okay.

[00:20:53] To what extent do we want to allow that. I know when my daughter way way way way way back when cell phones were first coming out.

[00:21:01] She really wanted a cell phone and it was like OK get a job. Before I even had a cell phone and she had to we were going on a trip and she wanted to go with a friend on a different trip.

[00:21:16] And I said you know there’s this thing called roaming charges I really don’t understand them but I know they’re really really high and I don’t think you should be calling from Texas. And you know that’s something you may want to look into and a month later she has a three hundred and fifty dollars phone bill because roaming charges. And we told her she had to pay that she had to work at the. She had she was working at a movie theater and she had to pay that. And it was painful. It was hard for me not to write that check because that was a lot of money for a thing. She was 16 at the time. And but we let her feel that pain as a as a learning experience. I think she’s forgiven us. I’m not sure. So understanding that pain is part of the growth process. Yeah.

[00:22:09] This next one we have to contend with is entitlement. E is for entitlement. You know that entitlement mindset. You know it starts it’s just this little small weed left you know and intended it’s going to grow like crazy and it consumes the beauty of relationships and it wreaks havoc on our lives. Now it is a it’s a barrier. I think it’s the huge barrier to not only a healthy financial future but but to relationships. And it doesn’t matter where you live you don’t have money entitlement you know the entitlement programs out there in the government you know we know they’re all broken. And if you have a lot of a lot of money people move into that entitlement mindset that basically says you know I have the right know so an adult child of an adult child feels that they have a right or claim to your financial resources just because they were born to you. You’ve got an entitlement problem and it is rampant in our society right now. It is it is scary rampant. And I think it is so entrenched and it’s a sick disease that we all need to take a look at what we’re seeing is that elder abuse and fraud is on the rise and it’s primarily happening with family members you know so if adult children feel entitled to your money in their early. 20s early 30s early 40s. You are exposing yourself to potential abuse down the road and we want our children to respect and protect us not take advantage of us or our financial resources. So we need to battle entitlement. Fight that tooth and nail.

[00:24:01] Yeah absolutely.

[00:24:03] C is for control.

[00:24:06] So do take a look at what are your personal motives. What are my personal motives for assisting our adult children. Warren Buffett has some fantastic messages around this and here is a quote from him is I’ve seen people try to steer their children and the worst things you could do is use money to induce given behavior with your kids. You know you hear this. I will pay for you to go to college if you get your medical if you become a doctor you become a lawyer. I know there’s a lot of handcuffs around money. So if there are any strings attached as you decide how to assist with money. Be prepared for you know there’s going to be resentment or pushback at some point down the road. Warren Buffett went on to I told my kids that they don’t have to do anything they don’t have to finish college don’t have to become doctors or lawyers. I told them to use their talents in whatever form they think would create the greatest net benefit to society.

[00:25:12] I now i that his, his kids are in philanthropic work. They do some amazing stuff but they were they were provided an environment to truly nurture themselves to their own true potential so as to search your heart and make sure that you have the best interests of each of your children in mind. And we know we love our children equally. We will treat them uniquely as a quote I stole from Ron Blue and the idea being that again we need to know and understand what clicks with our kids and we have to be willing to be vulnerable and I may do something for one child because this is their sole need and that’s going to be different in how I walk alongside you. You know one child may benefit from you financially assisting them and use it positively and productively where another child their personality that may not happen. So you want to be really careful and and love them uniquely.

[00:26:21] Yeah absolutely. Maturity levels are different. I mean just all sorts of things play into it. And going back to what you said earlier you’ve got to know your adult children you’ve got to know how they’re gonna react to certain things and you can’t control everything and trying to find that control point is tough because you want to control enough to where they don’t harm themselves but not control like you said I’ll pay for your college if you do this because now you’re trying to control the entire future. It’s a whole different right.

[00:26:49] So yeah if you have the financial resources and want to assist your children we want to look at timing RESPECT now or later if you are wanting to invest in their lives.

[00:27:05] Do you do it now or upon your demise. Again this is very personal and for each person to wrestle with with themselves and talk about as as partners right now you can give up to fifteen thousand dollars a year to anyone you want and a married couple could give thirty thousand dollars away. You know yes there’s very creative ways to do this. You could give appreciated stock to a child who’s in a lower tax bracket. So it would avoid you taking capital gains on which what you cash in with it or you know if they would inherit appreciated stock they’d get a step up in cost basis but you don’t want to look at how to do it until you’ve discerned the why and what’s the you know the reasonings behind it and walking alongside them to prepare them and give them the wisdom and how do you minimize that entitlement aspect of. Well you give them one chunk of change one year they going to expect it moving forward or are they spending it on those ego desires or are they using it for for sole needs. And so this timing issue a lot of people just want to say well I’ll just I’ll just leave it to them as an inheritance and they can figure out to do with it. I don’t think that’s respectful either. Again I think that idea of looking at the timing would it be beneficial to educate and empower and optimize you know what your how you’re walking alongside them now or you know is later better and maybe you know how much do you want to leave for your beneficiaries or what do you want to do with the rest of it. So this is this is not easy stuff. And like I, like I mentioned the more complicated your family situation is the more, more challenging it will be. We need to make sure that we just continue covering ourselves and everyone with with space and grace. I think we need to look at how do we bottom line cultivate good relationships.

[00:29:20] How do we not let money get away get in the way of meaningful conversation of deep relationships of of of what binds us together and really focus on not pulling us apart. As we look it at respect and a true Acrostic manner it’s about creating a poem. Indulge me in my attempt to create an acrostic poem with respect. My resources to be used responsibly like planting seeds to minimize ego desires and optimize social needs.

[00:30:06] Cultivate the soil. Allowing pain in order to unfold the beautiful process of growth. Battling the entitlement and control mindsets that choke out and destroy potential. Seeking perfect timing. To bring about the abundance of a full harvest.

[00:30:30] Beautiful. That was great. I like that. Yeah.

[00:30:34] So RESPECT as people are listening to this. If you’re if you’re saying okay a soul needs I really would like to talk to somebody more about that or you know. I’m battling some entitlement issues right now or it feels like that you know with my, my adult children or even even my late teen children that are getting ready to leave the nest. I think they’re already feeling entitled How do I stop this or how do I. How do I change that? Danielle, These questions are in people’s minds. How do they reach out to you to have this conversation with you know you’re not alone.

[00:31:07] Everybody is dealing with this stuff like you said and just doing life you can talk to us about a personalized journey of financial health. You can find us at www.wealthbydesign4U.com

[00:31:20] or you can look at our group learning opportunities workshop facilitation opportunity to take advantage of some of our online workshops or that educational insight at www.DanielleHoward4U.com. I would also encourage people to go ahead and download our Social Security handbook. And that’s found at that wealth by design 4U.com. Web site. I appreciate everybody listening. I also really appreciate your insight and feedback and if there are topics that you would like us to delve in to talk about to just you know continue the conversation as we look at wealth done differently. Yeah. Email me at admin@WBD4U.com.

[00:32:19] All right. Thank you Danielle so much for your time today. This is fantastic. Thank you Aric and thank you all for listening to the wealth done differently retirement podcast with Danielle Howard. If you have not subscribed to the podcast yet please click the Subscribe now button below. This way when Danielle comes out with a new podcast it’ll show up directly on your listening device. This makes it much easier to share these podcasts with your friends and family. Again thanks for listening today For everyone at Wealth Done Differently Retirement. This is Aric Johnson reminding you to live your best day, every day. And we’ll see you next time.

Thank you for listening to the Wealth Done Differently Retirement Podcast click the subscribe button below to be notified when new episodes become available. The information covered and posted represents the views and opinions of the guest and does not necessarily represent the views or opinions of Wealth by Design LLC. The content has been made available for informational and educational purposes only. The content is not intended to be a substitute for professional investing advice.  Always seek the advice of your financial adviser or other qualified service provider with any questions you may have regarding your investment planning. Danielle Howard, Certified Financial Planner is an investment adviser representative of Cambridge Investment Research Advisors a registered investment adviser. Securities offered through Cambridge investment research Inc.

A broker dealer member FINRA SIPC Cambridge and wealth by design LLC are not affiliated.



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