How to Not Financially Paralyze Your Children

If you’ve spoiled your kids – or are worried you might spoil them – here are some steps to take to help ensure they become financially independent.

A dad with his daughter who is holding a shopping bad and smiling devilishly
(Image credit: Getty Images)

There is an old saying: “The more you give your children, the more you take away.”

Today’s story began with an email from a hard-charging, financially very successful, real estate broker named “Steve” and his wife, “Cindy,” a stay-at-home mom.

“Our personalities are quite different. Cindy is quiet and non-assertive, while I am the bull in a china shop,” Steve wrote, adding, “Our three children – ages 7, 19 and 23 – have her personality. I do not blame them for that, it is just the way they are.”

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The Road to Financial Enabling Began Early

“The kids have been raised in affluence, especially the two older ones. An expensive car at age 16, credit cards, given plenty of cash, and sadly, they became lazy. We bought a condo for our 23-year-old son, and provide a large monthly allowance for him and his 19-year-old sister, neither of whom has the drive to succeed that we did.”

The email ended with this plea: “We do not want this to happen to our youngest child. What can we do? We need advice. How can we put them all on a road to self-sufficiency, and avoid further financially enabling and making them dependent? We now see how money can be a curse.”

Teach Young Children 4 Financial Goals at a Young Age

I ran these questions by Southern California-based financial counselor Scott Thor, who complimented the couple for addressing the problem now with their 7-year-old.

“There are four key lessons children raised in affluent families need to learn,” he points out. They are:

  1. Understand about earning money. Instead of an allowance, put them on a commission, to get a sense of doing something to earn money for the work they have done.
  2. Help them realize how saving money — not spending it now — makes it possible for a major purchase later. You want them to experience the joy and motivation of anticipation, picturing themselves with that new computer game, for example.
  3. Explain to your kids the importance of having patience and being satisfied with what they currently own. A lack of contentment with where you are in life materially often leads to overwhelming debt where credit cards become your worst nightmare, allowing you to spend way beyond your means. Another debt trap is leasing a car — that you never really own — with an interest rate of 20%. Why not save up for a car you can own outright? This goes right back to patience.
  4. Teach your kids not to hoard money, but to think of others, to give and to be charitable. When we look at wealthy families, one of the things that differentiates them from people who are not as good at managing their financial resources is their understanding the value in giving.

Much More Difficult with Older, Enabled Children

I asked Thor, “For their adult kids, what can they say or do, or is it too late?”

“Dealing with an adult it is much harder,” he underscores. “As parents you have to accept the fact that, ‘It is not entirely the kids’ fault as we have enabled their dependence on us.’

“You’ve got to cut it off, but you can’t do it cold turkey. You must set goals and help them become financially independent, able to live on their own income and not your money,” he observes, and lists the following two steps to follow when discussing these issues with an adult child.

  1. Take part of the blame. Say, for example, “I have not done such a good job when you were younger. Now we have to work toward you becoming independent.” Share that conversation with a friend or your spouse to see their reaction before delivering it to your children.
  2. Set a plan in motion. Create a six- to 12-month plan. Help them get on a budget.

How a Financial Coach Can Help

Thor explained that the goal of a financial coach is to educate clients about personal finance and help them develop a spending plan suited to their goals and values. “We show our clients how to take responsibility for their decisions, remain a source of financial advice, and require accountability from them.”

Thor, who has been a business consultant and financial coach for over 10 years, holds a doctorate in management from Newberg, Ore.-based George Fox University. He concluded our interview with this warning:

“The parents absolutely must stick to what they have stated in their intervention. If not, their own financial ruin is a real possibility. It is sad beyond words to see couples not far from retirement cash out their IRAs, sell their homes, getting into financial trouble themselves just to give money to their kids.”


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

H. Dennis Beaver, Esq.
Attorney at Law, Author of "You and the Law"

After attending Loyola University School of Law, H. Dennis Beaver joined California's Kern County District Attorney's Office, where he established a Consumer Fraud section. He is in the general practice of law and writes a syndicated newspaper column, "You and the Law." Through his column he offers readers in need of down-to-earth advice his help free of charge. "I know it sounds corny, but I just love to be able to use my education and experience to help, simply to help. When a reader contacts me, it is a gift."