As discussed in an earlier blog on Need vs. Wants…
This year is shaping up as a fiscally challenging one for our family. In the last two years, both Courtney and I were laid off, landing new jobs at much lower pay rates. Making things worse, our new home has much higher property taxes, and gas, food, insurance costs, etc., continue to climb. Our new fiscal reality is prompting me to review all expenses. Including what we cover for the kids.
As a busy parent, I lost sight of my children growing up and entering new stages of fiscal development. One day they were in diapers and fit in my arms. They needed me for everything, and I was happy to give them everything! Then… POOF! They grew up and our money relationship wasn’t so clear. After all, a toddler can’t be expected to pay for their own toys… but what about a pre-teen? A teen? A young adult? When is it time to wean them off the cash cow parent?
I’ve read many different opinions on this topic in various articles. Some believe in being overly generous in the spirit of “If I got it, why not spend it?” Other parents believe in covering life essentials only, requiring the kids earn every penny of discretionary income. Turning 18 for some families means it is time for the kids to move out and be on their own. For other families, their young adults are welcome to remain as long as they wish.
My own financial upbringing was uneven and it was often unclear what was expected of me. I was blessed with generous parents, and was always loved and never wanted for anything important – or even many unimportant things! But I don’t recall any conversations with my parents outlining specific expectations about when and how much of my living expenses were my responsibility. After college graduation, I went to work and quickly became financially independent so it was not an issue. Since then, I’ve made financial mistakes like persistent credit card debt, but also made good choices like always paying my bills and saving for retirement. Like any good parent, I want to use my life experience to help my kids live an even better life.
Just like holding their hands to help them take their first steps as a toddler, I want to help them take key financial developmental steps. For me, these include:
- Financial empowerment/ independence
- Self-management over spending, saving and goal setting
- Making financial mistakes, learning and becoming wiser
- Understanding limits to parental involvement/influence/responsibility
To manage these baby steps toward financial wisdom, and in light of our family’s new financial reality, I came up with a chart, Parent Tango-Childhood to Adulthood Transition Budget which I’ve shared with you here, to map out what is reasonable to expect from parent and child over time as they grow. It seems a bit cold hearted, but it works for me as a practical planning tool and a guide to achieving key outcomes. We have not rolled it out yet to our kids, so we’ll see how that goes! Of course, there will be exceptions, and the kids will be the first to spot inconsistent, unfair treatment of one sibling over another… Kind of like the never ending debates over who gets more ice cream or fewer chores! But it is a start, and that’s been the hardest first step for this father to take.