Cutting the Financial Cord on Your Kids

Kristina Kraus
Greater Nevada Credit Union
It’s natural to want to support your kids, but you don’t want to get stuck paying their phone bill and car registration when they’re out of college and almost turning 30. Many parents struggle when it comes to cutting their kids off. They think there is some magic age when they should stop the financial support, but the question shouldn’t be “when,” it should be “how.”

Because we are all raised differently and face our own life challenges, there is no exact roadmap on how to do this. There are some basic guidelines, however, that can be followed in order to ease off on the financial support.

Encourage Them to Work

Simply because your child is in school doesn’t mean they can’t find time for a part-time job. Schedules can be tough between school, sports and extra circular activities, though a lot of part-time employers can be quite flexible. An employer may even be more negotiable on their schedule if the student has already been trained. A lot of times kids will try to claim that none of their friends work while in school; however, when last polled in 2013, almost 80 percent of students had a part-time job.

One Piece at a Time

The last thing you want is to have your kids go into financial shock because all of a sudden they have a stack of bills and don’t know how to manage their money. Instead, try handing over one bill at a time. Your kids will be able to better adapt and at the same time learn how to start budgeting and managing their payments. If you pass off all of their bills at once, apart from overwhelming them, it could also damage their credit score if they make too many late payments.

Have a Conversation

If you decide that they are ready to manage their car insurance or cell phone bill, make sure to give them a heads up first. Depending on the size of bill, a few weeks or even months might be needed to get their finances in order.

Paying Rent

If your child is finished with school then there is no reason they can’t be working and contributing. Even if they are looking for a full-time job, a part-time position can be managed at the same time. At this point, it is fair to have them start paying rent if they live at home. It can be as small as covering utilities but it will help them to manage their money better and learn how to budget a housing expense. Adding rent may also encourage them to find their own place, which may be needed if they have been at home for some time.

If you have a younger child, one of the best ways to get them started on their route to financial independence is by having them open their own checking and savings account. Greater Nevada has a variety of accounts from which to choose, so you can pick what works best for your needs. 
8/21/15