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Still Supporting Your Adult Children? What Are You Thinking?

Peter Dun, Supporting Your Adult Children

With Peter Dunn, Columnist for USA Today and the Indy Star, Author of ten books, Comedian and Financial Expert, and Host of Pete The Planner Radio Show

Supporting financially dependent adult children is no laughing matter.  To find out why, Steve speaks with Peter Dunn.  Pete is a comedian, USA Today columnist, and the author of ten books.  He hosts a popular radio show, Pete the Planner, which combines comedy and financial advice in a surprisingly effective manner.

Financially Dependent Adult Children

Pete wrote “An open letter to parents who financially support adult children”, and ran a two-part series on the topic.  The first part is from the parent’s point of view, and the second is from the adult child’s point of view.

Takes Two To Tango

As he puts it, it takes two to tango.  When there’s a financial dependency issue between parents and adult children, both parties are to blame.

Parents At Fault

Parents love their children and don’t want to see them fail or suffer.  So they’re willing to financially support struggling adult children.  In doing so, Pete believes they are martyring the wrong resource.  He wants parents to not martyr their money but martyr their feelings.

Let children fail and learn valuable life lessons—much like they’d learn to ride a bike only when you let go. Perhaps let them fall a little.  They’re going to bleed, and you will feel uncomfortable, but it’s the best way to prepare your kids for the future.

Don’t Just Cut Them Off

Instead of suddenly cutting off financially dependent adult children, sit them down, let them know you’d like them to have a bright financial future, and set a realistic timeline to cut them loose.

Pete believes financially dependent adult children are the result of failed parenting.  He wants parents to admit their guilt and commit to fixing the problem.

Prep For The Real World

Steve believes hefty student debt is partly responsible for the problem of dependent adult children.  Pete adds that while encouraging talent is well and good, parents need to direct their children toward careers that let them earn a decent living.  Allowing them to take on student loans for degrees, such as music, could lead to difficulty finding steady, well-paying jobs.

Siding With Children

This mollycoddling starts when children are young.  For example, over the past two decades, parents have resorted to complaining more to/about teachers than children.  Parents are getting over-involved and over-interfering in matters related to their child’s growth.

Parents have started taking their kids’ sides and not the authority figures sides.  They blame schools for handing out “useless” degrees if their children cannot get a job out of college.

Instead of expecting an 18-year-old to make the most important financial decision of his life, Pete suggests that parents step in with career advice.

The Child’s POV

Pete urges financially dependent adult children to step-up, take responsibility, and extricate themselves from being dependent on parents.  This is crucially important because once the parents are no more, adult children who have not weaned themselves off financially will suffer.

The Firefighter

In closing, Pete speaks about a firefighter dad who was hell-bent on getting his son out of another line of work and into the firefighting business.  When his son became a firefighter, the dad was so excited, he decided to pay off his son’s $6,000 in student debt.  A few months later, the son bought a new $40,000 car, and the dad took on his car payments.

This went on to fracture their relationship, especially when the dad got sick and had no money.

If you have financially dependent adult children or are one yourself, heed Peter Dunn’s advice and do all you can to break this financial dependency.

Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

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Steve Pomeranz: My next guest is Peter Dunn, also known as Pete the Planner, an award-winning comedian and personal finance expert.  He’s also a USA Today columnist and the author of ten books. He hosts a popular radio show, the Pete the Planner Show, and is a columnist for the Indie Star.  Pete the Planner, Peter Dunn.  Welcome to the show, Pete.

Peter Dunn: Thanks for having me, Steve.

Steve Pomeranz: Just tell me really quickly how you found yourself in this field of giving personal financial advice.

Peter Dunn: I used to be a financial planner and investment advisor.  I noticed a trend in my clients that they needed more help with dealing with money and less help investing, so I was like, hey, I’m going to start teaching people how to deal with money effectively from a budgeting cash-flow perspective.  It worked so well, I ended up selling my investment practice, and now I work closely with financial advisors to fix the behaviors of their clients.

Steve Pomeranz: You wrote an open letter to parents which attracted my attention, which is why I asked you to join me today.  The letter was to parents who financially support their adult children, and I found it intriguing and well thought out.  It’s part of a two-part series.  The first part of the series is from the parent’s point of view, and the second part of the series is from the adult child’s point of view.  Take us through that a little bit.

Peter Dunn: It certainly takes two to tango, and when there’s a dependency issue between parents and adult children financially, both parties have culpability there.  From a parent’s perspective, we love our kids so much and we don’t want to see them fail or suffer, that we’re willing to martyr and sacrifice our money when they are struggling.  My assertion in the column, Steve, is that you’re martyring the wrong resource.  Don’t martyr your money, martyr your feelings.  Let them fail.  Let them figure out that in order for their resources and their bills to match up, they’re going to have to fail.  It’s no different than teaching your kid to ride a bike after taking off the training wheels for the first time.  If you don’t let go, they’re not going to learn, but if you let go, guess what?  They’re going to bleed, and it’s uncomfortable when your four or five-year-old is doing that, and it’s uncomfortable when your 24 or 25-year-old is struggling in this big, scary world, but you got to stay out of it.

Steve Pomeranz: The child’s ability after all these years of enabling, their ability to do proper budgeting and be resourceful may be limited, so do you just cut them off?

Peter Dunn: I’d set a timeline.  If you’ve the precedent of helping them when you shouldn’t, coming home and saying, “Hey, I was listening to On the Money and Steve Pomeranz, and Pete the Planner said, “You’re out!” You probably don’t want to do that.  You want to say, “Look, by September 30th, we are going to stop our financial support of you.” The reality is—and this is so hard—is that by a parent being in this situation—and no one’s going to want to hear what I’m about to say—but a parent being in this situation, in some way, that parent has failed.  Admitting that you’re in this problem, and admitting that you have to fix it is an admission of guilt.

Steve Pomeranz: Yeah.  If a child … let’s talk about student loans a little bit.  There’s a huge amount of overhang of debt burden from all of these student loans, which in a sense make the student out to be the victim.  The question is, who made these decisions early on that allowed this young person to take on such large amounts of debt and perhaps go into fields that you really both knew were not going to be very profitable, and yet you allowed it?

Peter Dunn: When I find a parent supporting their adult child who was a clarinet major, and that she followed her passion, or he followed his passion, it’s …well, the good news is they can play a lot of sad music on the clarinet because there’s no jobs.  As a parent, if you’re trying to prepare your child for the world, passion is great, but we have to prepare people to be contributing members of this society that we so revere.  Unfortunately, passions and contributing members to society sometimes don’t match up when, Steve—and this is the important element—student loans are involved.  When student loans are not involved, guess what?  You’ve earned the right to do whatever you want.  When you’re going to have to pay back that education, you better be able to pay it back.

Steve Pomeranz: Again, in this sense, it’s not just the child, it’s also the parent’s culpability in this decision-making process.  This idea that the parent’s brain turns to mush when it comes down to the question as to whether you’re going to allow that child to feel that pain.

Peter Dunn: My column, my assertion is that the only evidence of this…  you talk to any high school coach of any sport, any band director across America, and you ask them how often they hear from parents about a problem going on as opposed to students these days, and how that’s shifted over the last two decades.  Parents have started taking their kid’s side and not authority figure’s side.  This is a prime example of if you get a degree and you do well, it’s the school’s fault that you can’t earn money, not the kid that got a degree in something that can never earn a living.   Expecting an 18-year-old to make the most important financial decision of his life is kind of a stupid idea.

Steve Pomeranz: It sure is.  Let’s take a look at this process from the adult child’s point of life.  What do you think the adult child should say to the parent?  What side of this coin do you think the adult child should be on?

Peter Dunn: It gets especially difficult when the parents didn’t have a hard conversation with the student about what they’re studying.  If the parent let them off the hook and let them get a terrible degree with a lot of debt, then it’s super complex.  I think it’s on the child to cut themselves off because, like I said, when you become a parent, you love your kids so much, you’re going to dive on a grenade for them.  You, as the child, have got to say, “Look, you live your retirement.  I don’t want to be your problem.”

The harsh reality of this, Steve, and you as a financial professional know this, parents are delusional.  They think that because they support their adult children that the adult child is somehow going to have the wherewithal and financial means to repay the favor when they’re elderly.  No, they’re not!  They don’t have the skills, they don’t have the independence, and they’re not going to have the money because they’ve been enabled for so long.  I think the kid is the one that can say, “All right, I’m done.”

I don’t want to glorify what I did, but at the age of 22, I moved out of my house the second I graduated from college because I refused to make my problems my parents’ problems because they paid for my college.

Steve Pomeranz: I’m speaking with Pete the Planner.  His name is Peter Dunn, and he’s an award-winning comedian and personal finance expert.

In the article, you listed a story about a firefighter client of yours who was pleased to welcome his son to his engine company.  Do you want to take us through that for a few minutes?

Peter Dunn: Yeah.  For years, this guy had been talking about getting his son out of another line of work and into the firefighting business. He finally did, but the problem was that the kid had six grand in credit card debt.  The dad was so excited he said, “You know what, man?  I’m going to help you wipe that out.  I’m so happy.  This is great.”

A few months later, the son shows up with a brand new, huge $40,000 truck, and he took on a car payment.  Basically, the father ended up paying off this credit card debt and the son turned around and more or less financed the truck with the dad’s generosity.  It fractured the relationship, and it got worse when the dad got sick and had no money.  It is a perfect example of why, in my opinion, the generations should not mingle financially. Steve, the ultimate question here to ask is, “When you were your children’s age, did your parents assist you?”  The answer is no.

Steve Pomeranz: No.

Peter Dunn: In no circumstance.  We now know a thousand reasons as to why that all of a sudden makes sense, but it never will.

Steve Pomeranz: You write in the article for the child’s side, that if you’re being supported by your parents, every French fry, every beer, every sandwich you consume is not yours to consume.  It’s your mom’s beer, it’s your dad’s French fry, and your mom’s sandwich.  Every song you download, every movie you watch, every mile you drive belongs to your parents. Final words?

Peter Dunn: People didn’t like hearing that.  I’m not joking when I tell you I had received four death threats because of that column.  It hit a nerve in the United States, and I’m glad we’re still talking about it.  It’s an ugly topic, Steve, and you haven’t heard the last of it because this problem’s only going to get worse with the sort of entitlement we have.

Steve Pomeranz: I think it’s the elephant in the room for many parents, and it’s absolutely important that this be talked about.

My guest, Peter Dunn, known as Pete the Planner.  You can find him at Petetheplanner.com.  You can hear this interview again.  You can actually download it and send it to your kids.

Thanks, Pete.

Peter Dunn: Thanks, Steve.