Family Matters: Strategies for Assisting Adult Children Financially

At Highland we often get questions from clients about how to best support their adult children financially, whether it is helping them buy a house or pay bills. We hear questions like: How can we provide financial support to our children in an equitable way? How do we ensure we are helping our kids in such a way that it is good for them, for us, and our relationship? Clients turn to us to help them navigate these questions and these decisions in a smart way, taking into account their complete financial picture and the family dynamics at play. We do that through conversations and analysis but also through tools to empower them in their decision-making.

In this conversation, John and his wife, Kelle, speak with two Highland advisors and certified Wealth Confidants, Kyle Thomas and Coleen Kroeger, about how best to approach providing financial assistance to their adult children. While guiding them to a decision about whether or not to support a home purchase, Kyle and Colleen share insights and tangible ideas for navigating these decisions. You’ll also learn how Highland helps clients think about the big picture, understand their accurate financial options, and consider the best course forward based on what will serve the family as a whole.

Here are strategies Highland often recommends to help clients make a plan that works for them when it comes to supporting their adult children financially:

Begin By Looking Back

As you begin the process of creating a plan, it can be valuable to take a moment to reflect on your own experience. Think about ways your parents helped you and ways they did not. Consider gifts beyond just the financial, like the gift of time or a strong moral compass. How did these gifts benefit you? How could things have been done differently?

Define Your Family Values:

1. Get clear on what your family values most.
2. Consider creating a family mission statement or list of values that define what your family stands for and where you want to focus your time and money.
3. Use this statement to inform decisions about how and when you will use your wealth.

Consider the Role of Equality in Your Decisions

If giving to your children equally is important to you, consider which type of equalization fits best for your family. Absolute equalization is when things are numerically equal (ex. you give one child a down payment on a home, therefore you give all other children the exact same amount of money). Relative equalization is where you provide equal situations for your children based on location and cost of living (ex. you buy a four-bedroom home for both of your children- one lives in New York, the other in Austin, Texas. Due to the cost of living the amount you provide each child will be different).

Create Open Conversations

While this may feel awkward at first, keeping the communication open and honest can be key to handling difficult situations. Consider having a family meeting with all of your children and their spouses on a regular basis to talk about topics like goals, new endeavors, and important family matters. Start with easy conversations and let the complexity and depth build organically.

Change Your Approach

Your wealth is a blessing! Rather than approaching this as a stressful situation, consider how it can have the most impact in a way that is empowering to your kids and aligns with your family values. When times get stressful, anchor yourself in the gift that it truly is.

Turn Your Focus Forward

Imagine yourself revisiting this conversation in five years, excited that things are looking and feeling the way you wanted them to. Take that vision and reverse engineer to get back to where you are now. What conversations can you have now? What changes can you make to get you one step closer every day?

Try and Try Again

Every family is unique. There is no one solution that fits all. Lean on your Wealth Confidant to help you find new ways to do things. Test them out and iterate until you find what works best for you.

Consider Creating a Family Bank

A family bank can remove some of the stress of random decision-making from your shoulders and put the ownership and empowerment in the hands of your family members. Create a family bank where your children can come to you to propose loans or withdrawals based on alignment with your family values or mission statement.

Need to define your plan for how to support your adult children financially? Highland is here to help. Reach out to start a conversation about how to implement a strategy that will work for you and your family.