3 Reasons Why Your Adult Children Need A Financial Plan

Timothy Brown |

By Timothy Brown, MBA, CFA®, CFP®, RICP®, AIF®

I’m going to share a fairly shocking statistic: 79% of parents with adult children are helping to support them financially, according to a survey by Merrill Lynch. (1) And 63% of parents report that they are sacrificing their own retirement savings to do this. (2) Although we have to wonder why this support is so common in today’s day and age, we won’t attempt to answer that question here. 

Instead, we’ll propose a solution for what can be done to help your adult children build their own financial security. Even if your family doesn’t fall within these statistics, or if you help support your adult children without sacrificing your own savings, there are compelling reasons for why adult children need their own financial plan. We explain 3 of the most important reasons below.

1. Get Your Children Off The Mom-&-Pop Payroll

If you can afford to help out your adult children without sacrificing your own security, that’s great. But what if you could use that money to build even more security for yourself? An individual turning 65 this year has a 70% chance of needing some type of long-term care as they age, (3) which could mean you need more for your retirement. Or what if you could otherwise fulfill a dream of yours in retirement that you haven’t yet accomplished?

At some point, the Mom-&-Pop Payroll should come to an end so you and your spouse can enjoy the wealth you’ve built for yourself and use it for your own needs. If you’ve provided your children with a safe place to grow up and given them a secure foundation from which to launch, you’ve done your duty as a good parent. It’s time to let your children learn the skills they need. 

2. Watch Them Flourish Financially

There’s something special about watching your children leave the nest—and we mean truly leave the nest, finances included—to succeed on their own. The truth is, you won’t be around to support them forever. When they have their own financial plan and are achieving their own goals, you can rest assured they’ll be able to provide for themselves when you’re gone.

Furthermore, your children’s goals are likely much different than your own. They have their own dreams, and they’ll have their own method of getting there. A financial advisor can help them make the most of their unique opportunities with the resources they have available.

3. Make Sure They’re Prepared For Inheritance

Adult children with a financial plan will also be more prepared to honor any inheritance you leave for them. Working toward financial goals with a solid financial plan will reduce the chances that your children will improperly use inheritance money. And adult children with stable finances will be more equipped to carry on the family legacy and values you’ve instilled in your estate.

On the other hand, your best possible scenario might be that your adult children are so secure in their own finances, they don’t need an inheritance at all! If they can stand on their own two feet and provide for themselves and their families with abundance, you and your spouse are free to spend every last dime of your retirement savings without feeling any guilt or worry for your children’s future. And perhaps that is the greatest gift you can give to your entire family. 

Refer Them To A Partner You Trust

When your adult children are ready to partner with a financial advisor, refer them to a partner you trust. When multiple generations are working with the same financial advisor, wealth transfer and legacy planning becomes seamless. Our team at Brown Wealth Management would love to help. Schedule a free introductory call by reaching out to us at (952) 303-6715 or info@brownwealth.com. We’re excited to get to know your family and to carry on your family legacy with all members included.

About Tim

Timothy Brown is founder and president of Brown Wealth Management, an independent, full-service wealth management company that helps individuals and families prepare for all of life’s milestones and events. With more than 20 years of experience in the financial industry, Tim strives to help his clients live happier, more fulfilling lives with the confidence that they have been good stewards of their finances. Tim has a bachelor’s degree in finance and accounting from the University of Colorado and an MBA from the University of Minnesota’s Carlson School of Management. In addition, he holds a rare combination of credentials: Certified Financial Planner™(CFP®), Chartered Financial Analyst™ (CFA®), AIF® - Accredited Investment Fiduciary™ (AIF®), and Retirement Income Certified Professional® (RIPC®). Tim has been recognized for his hard work by receiving the Five Star Wealth Manager award in both the Mpls.St.Paul Magazine and Twin Cities business magazine since 2013. 

When he’s not working, Tim enjoys spending time in Eden Prairie with his wife, Stacey, and their four children. You can often find him keeping busy by staying fit, pursuing a black belt in Tae Kwon Do with his three boys, assisting kids with Boy Scouts, and attempting to read two books per month. To learn more about Tim, connect with him on LinkedIn.

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(1) https://www.ml.com/the-financial-journey-of-modern-parenting.html 

(2) https://www.businessinsider.com/adulthood-most-expensive-for-parents-merrill-lynch-report-2018-10 

(3) https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html#:~:text=Someone%20turning%20age%2065%20today,bathing%2C%20and%20using%20the%20bathroom