It's likely that your kids are your pride and joy and no matter what, you'll always be there for them, even if that means financially taking care of your adult child who is well in their 20's. But, what if your financial security blanket is doing more harm than good?
Stacy Johnson, CPA says when helping out your adult kids financially starts to hurt you financially, that's when you cut that cord. Here are a few tips to get started.
1. Have a conversation
Have a serious chat with your adult child about your concerns. Let your child know that you want and expect them to move out. Explain that this is good for them, good for you, and good for your relationship. Be kind and loving, but be firm.
2. Make a plan
Set a cut off date. Give your adult child about 2 months to get their life in order. Some important cut-off dates include: going to college, finding a job, and finally, getting an apartment or a home of their own.
3. Offer help
It should be free help, of course. For instance, babysit if they need someone to cover while they work or hunt for a job. Your assistance can be as simple as providing a reference to their potential future employer. However, if you do decide to help, make sure it doesn't require you to dig into your pockets to do so.
4. Lead by example
There is only so much you can say to persuade them to get their life in order. It's up to you to show them how by your actions.
Share the slideshow below with your child for some easy ways to put more money in their pockets:
Easy ways to put more money in your pocket
When to cut the financial cord on your kids
Automate your finances.
Set up your finances so that money is taken straight from your paycheck and deposited directly into your savings account or a retirement savings account. You can also set up your fixed bills like your Internet and cable to be automatically deducted from your checking account. Automate your finances to save time and prevent overspending. If you see extra money in your account, chances are you’ll find a way to spend it, leaving you little to invest in your future. Automation helps keep your priorities in line so that as money comes in, it is dispersed to your other accounts immediately.
At least twice a year, look at your expenses line by line and see if you’re getting the most bang for your buck. For example, do you read the magazines you subscribe to or maximize that gym membership? If the answer is “no,” consider canceling or negotiating a better rate. Take that money you save, and apply it toward bigger payoffs like debt reduction, retirement or an emergency fund.
Lots of people use debit cards to make it easy to buy and budget for groceries, gas and other routine purchases. Instead of doing that, look into a credit card with a great rewards program for those daily purchases, and set it up to automatically pay the statement balance from your checking account each month. Over the course of the year, you could potentially pocket a few extra hundred dollars just by using a card with a good rewards program instead of your ordinary debit card (just make sure you’re paying off your credit card every month, so you don’t pay extra in interest).
Boost your income.
If you love your job and want to grow your career, it's time to think about boosting your income as well. Make it a goal to negotiate a raise this year. Consider your strengths and look at the value you've provided to your company over the last six months to a year, and discuss it during a performance review. This can feel intimidating, but it never hurts to ask.
Get a side gig.
Take advantage of your skills, or turn a hobby into profit. Doing so can help you generate extra income – which you can put toward reaching your financial goals. Etsy, for example, is a great place to sell one-of-a-kind products. If you have Web design, copy editing or other creative skills, consider offering your services on freelance websites such as Fiverr or Elance. These types of side gigs will allow you to earn extra income while also growing your skills.
Track your progress.
You can’t save money if you don't know where your money is going. Every month, track your net worth using a personal finance tool or app that will show you exactly where your money is going. This will make you think about your entire financial picture from income and expenses to investments and taxes. With this focus, you can ultimately make the greatest impact on your finances in 2015.