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Money Mistakes Parents Make with Children

Retirement is Wonderful when you have – much to live on and much to live for!

In most of the Indian households, it’s a general practice of parents to have more of “College & Marriage Savings” than “Their Own Retirement Savings”. If you’re reading this column and this line describes you also, then you might need to reconsider your priorities. Retirement saving is a necessity because if you do not have a shelter above your head and food to eat when you grow old, there is no sense of keeping to save for your child’s education and marriage.

You remember the flight safety instruction video guidelines in a plane? It says, “Attend to your oxygen mask before you jump to your child’s one”. There is nothing to be misinterpreted about airlines for they care less about our children, it’s just if the parent dies of anoxia there is no one to be taking care of the kids or anyone else in the family. Taking your care now is the best thing that you can do or all you end up is expecting your children to be taking care of you. And when they are not as good as you had expected them to be when it actually comes to taking care of you in your old age, you feel disappointed.

Parents must rather be focusing on developing a financially independent child since the very beginning. Children should be raised in a way that they are not in demand of any sort of financial upkeep from the parent’s side. A financially independent child is not always the one who lives away from for his parent’s house, but the one who lives in the parent’s house and contributes equally towards the expenses of the family is also considered an independent one.

Let’s Learn What Happens When Kids are Financially Dependent on Parents?

  • It’s a constant financial drain at the parent’s side for the children. In such situations parents never are able to save for their retirement fund and they might end up with little or no savings for their retirement. Later they become dependent on their children for taking care of them while they’re old.
  • When a parent keeps on guiding the child financially, the child never learns how to survive on his own. It’s really quite strong step to be living your life independently. But for that one person who is financially dependent on the parents, this lesson often gets elongated and hard to be learnt.
  • Financial dependency of a child makes the child lesser mature than a financially independent child. Maturity is what brings an adult child & the parents on the same page, a state which is beneficial for both the parties.

Financial dependency is one thing inevitable in many households of India. And it hurts both the parties equally, as this is the one thing which becomes the reason for all the clashes at home when the expectations of either of the parties are not met. Nobody likes to fight with their child or parents on the matters of money, but when you share the expenses and someone’s contribution exceeds the other’s it creates imbalance and leads to disputes.

How to Avoid Your Child from Becoming Financially Dependent on You? 

Keep yourself reminded that you have to make your children financially independent. You will need to keep in mind in every walk of your life that whatever you’re choosing for your child, is making him/her financially independent or not. This should be happening since young age, if not necessarily must be from the high school time but always in soft manner.

Also Read: 5 Important Financial Decisions To Be Made Before You Are 30

Make your parenting decisions wisely taking into account the consequences in terms of learning for your child. Think before you do all the laundry for your child, instead you should be teaching them to do their own laundry. Make your child aware of the monetary impacts on life of whatever he opts to do, and turn them into teachable moments. If you provide an affluent luxurious lifestyle to your child since the very beginning, the child will not understand the cost involved in the same. Let the child earn the luxury and comfort by putting some efforts in the form of chores at home or in community which brings positive changes in them.

It is more like making them practice the basic life skills of earning things rather than having things given to them.

Lessen the financial help with time. Let your relationship with your child flourish more of a mentor and mentee kind, which as an adult your child will also appreciate. A thorough life guidance and occasional non-financial help (no direct financial aid) is what strengthen the relationship of parents and children in a long term.

Parents must be ready to calibrate their roles with time and contribute in the same manner in their child’s life. When your child reaches an age when they can earn money, roll out our money giving sleeves up to a large extent. If they struggle doing the same, offer meaningful advice and propose different viable game plans for them to act. But let them choose between the choices themselves, and walk on them. Assure them that if they fail you’re there to support them but they should gather the courage to lead their life financially. Once they are in their teen years, let them feel as if they are walking on a tight rope but stay ready with a safety net around.

Parents should not solve young kids’ problems by giving money or alike things, let them begin to deal with the adversities of life and come up with solution with limited resources available. This kind of support helps the child develop independent skills during their teen years when they are at home, and prepares them for non-financial relationship in their adulthood.

You must express your expectations clearly and early in the due course of your parenting. Thick and thins are everyone’s part of life, but having things communicated clearly and early with your children helps solve such problems a lot.

A parent must be very clear with what all are they going to provide to their children after their school period is over and they are ready to earn money on their own. For instance, you must talk about the college fee with your child as in what percentage of the fee you are going to bear and what the child has to arrange on their own. In case you are taking an education loan for your child, it must clearly be communicated to the child that they have to repay that loan once they have completed their college studies. If during the college days, you’re sharing the burden of loan repayment taken for college fee or you want the child to do the same by earning on part time basis.

All these points must very clearly and as early as possible must be cleared with the children for not setting any wrong expectations among them. Be clear with your children that you’ll be with them for advice and assistance, and will always be there to help but they must be ready to help themselves first.

Also Read: Financial Planning – The Best Decision To Get Rich

Develop clarity in children that you’ll help them only when they’re ready to help themselves. Parents are considered to be the God’s second form and even when God helps those who help themselves, why should not a parents also do the same. Most parents would not find themselves comfortable doing it, but if they don’t prepare their kids for an independent life today it is going to turn into their worst nightmare tomorrow.

Sometimes parents also worry that via doing such actions with their children, they might feel abandoned and that they won’t be helped even in the lowest point in their life. Let’s this not become the case, and clarify on each points made clear as to why as a parent are you doing an activity and how it is going to turn into their favour eventually.

Communication is going to play a vital role here. Whether it’s stating out the expectations clearly before your child, making them understand the importance of their independent life, being a friend-cum-advisor-cum-mentor, or assuring that you’re there for them in the hardest time ever.

A parent should always be helpful for their children along the path of success, but never the enablers. As long as the children’s steps are moving in the direction of successful independence, make them believe that you’ll help them in every walk of this path.

Brush the children’s independence life skills early in their lives. We often hear from the grandparents in the family not to put small children of age range 7-15 on any sort of work for they are small and let them enjoy their lives such stuff. But the reality is the more we’ll have them clean their own dishes, make their beds after waking up in the morning, make them do their own laundry, make them prepare meals for themselves, make them mow the grass in the garden, make them organise their school planner or getting their finances in place and planning their expenses; the more future independent kids they’ll become. Because by practicing such activities, they get a sense of the life of an adult. They can learn these things under the safe umbrella of their parents while they are small. This way a parent will certainly raise a highly confident and independent child. Initially children may throw some resistance towards doing the house chores, but it is our duty to make them realise the worth of these chores towards learning the life skills and leading a future independently apart from being involved in the regular household work.

Also Read: Financial Planning Tips Post Retirement

Financially dependent children can be a big burden and prove to be a financial drainage on the parent right at the moment when they need to save for their retirement and relaxed times the most. It is not just the financial drain that causes pain to the parent, but the emotional drain as well. No parent wants to see their child devoid of financial amenities and enjoying themselves after their retirement. Parents need to build a strong foundation of financial independence since early life in children so that it becomes their habit.

We can understand that as parent many of the things underlined above can be way too tough to be carried out with children, but it is needed for the parents to have a financially secured retirement and for children to have secured a place in the world on their own. The emotional bond that exists between the parents and children makes this act very difficult for a parent, but to push the children little out of the door is sometimes needed for the benefits of all.

The act is certainly not going to be easy, but if a parent eventually wants a mentor-mentee kind relation with their children when they are grown adults this has to be done slowly and steadily. This helps strengthen the future a parents wishes for their children and for themselves.

Vikas Agarwal
the authorVikas Agarwal
Vikas Agarwal is an IIT-Varanasi graduate in Chemical Engineering. He is the Founder and CEO of - an investment advisory website. He is a Business Development Professional but a Value Investor at heart. He writes articles on Finaacle, which focus on simplifying the art of investing and the causes of human misjudgment when it comes to investing. He also shares his experiences as an investor and lessons from some of the greatest investors of all time.

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