Is Financial Support for Your Adult Children Always a Gift?

Is Financial Support for Your Adult Children Always a Gift?

Is it always an act of kindness to give your adult children financial support?

Many parents who give their grown children financial assistance have good intentions. While their generosity appears to be a gift on the surface, these adult children may pay a heavy price for the free money.

Why is supporting your adult children so damaging?

When overprotecting your king ruins your game

Let’s take a look at what happens if a chess player is too protective of his most vulnerable piece – the king:

As the most important piece on the board, the king needs protection. But sometimes building a strong fortification around the king makes it more susceptible to a deadly attack since it cannot move itself out of harm’s way. Too much protection of a valuable piece can actually stifle its movements.

Similarly, as a “chess dad,” who has watched winning and losing tournaments, I can tell you how difficult it is not to help my kids. I know that when the pressure is on, it’s important to let them play their own game. By giving them space to move themselves, they learn how to become self-sufficient.

This teaches an important financial lesson: Sometimes overprotecting a valuable asset leads to its ultimate downfall. This may happen if you give too much financial support to your children.

Consider those folks who hover over every aspect of their children’s lives, buying their sons and daughters anything they want. Their tuition and extracurricular activities, no matter how expensive, get delivered to them, along with credit cards to use without needing to pay the bills. Finally after grad school, an internship or two, and paid-for rent, the children – now in their late twenties or thirties – must face the world. They feel like kings, since their parents treated them that way. But like the kings who were forever protected in the back rank, many have been so sheltered that they cannot parry against threats and they do not know how to navigate through the basics of handling money on their own.

Teach your children financial responsibility

On the chess board, to avoid getting stuck in a back-rank check, you need to move one of those pawns up a square at some point in the game. By doing so, the king can slip out if attacked. Likewise, any child who had to earn his allowance, get a part-time job, and become involved in handling his money from a young age will understand the concept of budgeting and setting up an emergency fund. Then, he can prevent potential financial disaster, or if challenged from an unexpected direction, he’ll have an escape route, too.

When preparing your children for becoming responsible adults, sit at a chessboard and show them how they don’t want to be like the king who was suffocated by not having an escape route.

For more about how to teach your children about money while they are still young, click here.

Douglas Goldstein, co-author of Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investingis an avid chess fan, international investment advisor and Certified Financial Planner.TM