contemplating the future

Setting your adult kids up for financial independence

Financial advisors share that today’s young adults are most concerned about two key areas: home ownership and a desire to be more spontaneous with their money. That may mean travelling, going back to school to study or supporting meaningful causes. Yet with home ownership becoming increasingly difficult to achieve, high student loan debt and stagnant wages, many Gen Y and Gen Z adult children are turning to their parents for financial support.

Supporting adult kids financially can be as small as paying for groceries, gas or cell phone bills – or as big as helping them out with a down payment on a home. While it’s natural for parents to want to support children both emotionally and financially, it’s crucial to ensure kids don’t rely solely on the “Bank of Mom and Dad” without learning to stand on their own two financial feet.

Is your support jeopardizing your retirement goals?

In some cases, helping your kids may even be hurting you. A recent Children and Financial survey indicates that many parents struggle to support their children, often far into adulthood – jeopardizing their own retirement plans. About 30 per cent of Canadian parents say their children are causing financial strain, with 31 per cent indicating that assisting their children with post-secondary costs will postpone, or already has postponed, retirement. At the same time, young adults who don’t learn financial independence may not be able to achieve everything they hope to – and parents won’t be around to bail them out forever.

Practical ways to encourage financial independence

Cutting the money cord can be difficult, but here are a few guidelines to help start your kids off on the path to financial self-sufficiency.


If your children are living with you, begin by setting expectations around when your children will start paying for their own expenses like cell phone bills or car expenses. Remind them that it’s not that you don’t love or care for their wellbeing, but rather you want to set them up with good financial habits to provide for themselves.

Create a timeline

Prepare your kids by giving them a reasonable timeline to organize their finances and emotionally plan to fully support themselves. No matter how much you’re giving your child, you’ll want to give them enough lead time to adjust to living without this support. If it’s just a few hundred dollars a month, a couple of months should suffice, but if you’re supporting them entirely, you’ll need to allow much more time to help them stand on their own two feet. Choosing a date and sticking to it makes it easier for everyone to follow through.

Establish a budget

Many people have no idea what their monthly expenses are – your kids are likely unaware what they earn and what they spend. Once you’ve helped them create a budget, you’ll be able to see what gaps exist, where they still rely on you and how you can help them reduce spending and increase savings. Be sure to review their budget together frequently in the first six months. There are many free apps and websites that can help your children budget and track expenses – talk to your financial advisor for suggestions.

Encourage early investing

Saving earlier can help your adult children benefit from the power of compounding on their savings. Even small amounts invested regularly, whether through an RRSP or a TFSA can make a significant difference in their savings down the road. Starting to invest at a young age also helps your adult kids get into the responsible habit of saving and setting aside money for their future.

Help your kids get set up to file taxes

For young adults who are filing taxes for the first time, the prospect can be daunting. The good news? At this stage in their lives they are unlikely to have complex financial circumstances. There are also a host of simple, intuitive websites to help them work through the process, including and

Model good financial habits

Share how you learned to make financial decisions in your early years, and how you’ve learned from past choices. Let them know that if they stumble, it’s okay – it’s more important to focus on what they can control by creating an achievable action plan.

Need more tips on how to help your adult kids become financially independent? Speak to a Richardson Wealth Investment Advisor.

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