When is it time to stop paying your kids' debts?

By Marianne Curphey

It seems we all know someone whose adult children are still living at home, "kidults" who still look to the Bank of Mum and Dad when it comes time to pay bills or make large purchases. While parents of these young adults may think they are simply helping their child get through the "rough years", they may be doing more harm than good.

According to September 2016 research from Sainsbury's Bank, parents in the UK expect to support their children until age 29. Between 2015 and 2016, UK parents took out nearly £2m in loans to support their adult children. Most of these loans were for weddings, but parents also covered education costs, cars and even household expenses. 

When you pay off your grown child's debt, you likely are trying to make life more bearable for them. However, you aren't allowing them to experience debt or learn money management skills, says Becky Wright, founder of New Leaf Life Design life coaching and counselling.kids-debt

"Parents can often shield children from the reality of their behaviour by constantly paying off [their children's] debts, and this sets up a pattern of behaviour that can become difficult to change over time," says Wright.

It can be hard for teens and young adults who are used to instant gratification to learn that, in the real world, you can only buy what you can afford, and your lifestyle must correlate with your income level, says Jane Cox, human behaviours specialist, coach and wealth psychology expert at New Levels, a life mentoring and coaching service.

Money education should start early
Wilma Allan, money coach and founder of The Money Midwife, believes it is important to educate children early about the connection between earning and spending, rather than waiting until you think they are "old enough".

Continue talking with them as they grow up. "As your child heads toward secondary education, it is helpful to discuss in detail the practical aspects of living on a budget and how to live within your means," says Philip Pearson, an independent financial adviser based in Southampton. "If you prepare your child for the financial world outside the family, then the risk of debt being created is substantially reduced."

When (and how) to wean your kids off your money
Encourage your children to work while they are in college, but don't pressure them so much that their coursework suffers. Once they have finished university, encourage them to take more financial responsibility for themselves.

If you reduce your financial support gradually while they start to earn a regular wage, you can avoid cutting them off cold turkey and avoid being their financial crutch forever.

What do you do when they complain about not having enough? Try to sympathise rather than handing over a cheque or your credit card. If your young adult is distraught because he has to live in a small flat instead of a nicer home, share your stories from when times were tough. For instance, did you, too, have to use secondhand furniture? Explain that you know what he is going through and guide him on how to spend his money wisely.

It's also important to remind your child not to compare herself to others around her, even you. Remind her that she will not immediately be able to afford a lifestyle that someone else has worked years to sustain.

Overall, be patient and firm. Don't tell your child you won't pay his bills, then give him "one more loan" the next month.

Helping out your kids occasionally is OK
"Sometimes, when unexpected expenses occur, such as an unplanned car service, or another one-off type of event, it might be quite nice for you to take away an unexpected burden if you can," Cox says. "But don't make such a regular thing of it that it becomes expected of you. They need to learn to budget for rainy day expenses."

Cox also says you may help out with recurring expenses, such as a credit card payment or mortgage payment, if it is a one-time, special circumstance. The rest of the time, she says, instruct them to include such payments in their monthly budget.

"It's quite right for parents to try to help their children in any way they can, but if they are to have a comfortable future themselves they will have to pick and choose what they help to fund and by how much," Jasmine Birtles, founder of financial website MoneyMagpie, said in the Sainsbury's report. "Maybe it's time we taught our kids to be more realistic about things like weddings and gap years so that limited funds are spent on only the most important things like education and a home."

See related: Should kids and credit cards mix?, Child-rearing costs are putting parents over 60 in debt

Updated: 28 October 2016