Is Financially Supporting Your Earning Child A Healthy Practice?

By Sanesh Mathew | June 28, 2020

Are you still giving your earning adult son or daughter money for splurging? Here’s why this isn’t a good practice.

Is Financially Supporting Your Earning Child A Healthy Practice?

Are you still giving your earning adult son or daughter money for splurging? It is time for you to put an end to this practice. Financially supporting your earning child’s lifestyle does more harm than good, not only to your child but to you too.

An important reason why you should draw the line is your retirement corpus. Every rupee that you spend on your financially independent, adult child reduces your retirement corpus. Although it may seem like a rather extreme step to stop spending on your kids, it is necessary to remember that money is a limited resource.

Additional Reading: Are You Saving Enough For Retirement? Find out

Let us now discuss the different financial subsidies that Indian parents usually provide their earning, adult children.

  • Subsistence Allowance

You provide your kids with a place to live, take care of their core living expenses and even share transport with them. This is a great support for your kids, especially when they just start earning and their income is low.

However, they will never be able to learn how to survive on their own income if you keep this up. Besides, the subsidy provided by you allows your child to have enough money in their hands, which he/she can utilise to spend or save without worrying about core expenses.

Additional Reading: Financial Lessons You Can Teach Your Kids

  • Cushioning Allowance

Funding your adult child’s trip to Singapore or chipping in for large expenses generally falls under this type of allowance. Your finances may be way better than your adult child’s, but that does not mean you should, either willingly or as a result of emotional blackmail, subsidise his or her expenditure.

  • Brat Allowance

These feature all the subsidies that practically spoil your child. These subsidies can range from paying off your earning child’s Credit Card dues, loans, or even funding for their car or flat.

Giving them pocket money is also a type of ‘brat allowance’ that literally spoils them. If you keep pampering your kids with these subsidies, you’re encouraging them to live beyond their means.

Why you should separate your financial life from your adult kids?

Firstly, you aren’t allowing your adult child to learn how to manage his or her finances. In the long run, it is necessary for them to learn the art of managing their personal finances. Remember that you’re not going to be around always. So, it is necessary to let them learn to live with their income, however meagre the sum may be.

Then again, if you think they’re earning too little, you could define your monthly contribution. This is quite simple to do. Fix a certain amount of money and a date till when you will provide them with extra income. Since you’ve clearly cut a deal with your adult child, it will allow them to prepare themselves better.

Additional Reading: Parenting – Has Your Bank Balance Grown Up Too?

Secondly, by financially subsidising your adult kids, you’re giving way to superfluous assumptions and expectations that could lead to disappointments later. In other words, you’re giving money a chance to negatively affect your relationship with your child.

Finally, always keep in mind that all the financial subsidies you provide to your earning kids are permanent. It is going to hurt your finances, while at the same time spoiling the receiver. So, before you rush to fulfil your earning child’s desires, think of ways you could impart good financial management skills to them.

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Category: Money Management

About Sanesh Mathew

A talkative sleepyhead, Sanesh, enjoys watching horror movies, listening to music, reading all things related to personal finance and wandering aimlessly (walking meditation, he calls it!). He refers to himself as a 'simple human being with a rather chaotic mind'.

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