Setting Financial Boundaries with Your Emerging Adult: Discussing Costs and Expenses with Transparency and Honesty

As your son or daughter moves towards independence, one of the most important things they must learn is financial responsibility. Setting clear financial boundaries and being upfront and honest about costs and expenses can lay the foundation for a healthy and sustainable relationship between parents and their emerging adult. Let’s talk about the importance of setting those boundaries, strategies for effectively communicating about money, and tips for having financial independence while still maintaining parental support. 

The Importance of Setting Financial Boundaries:

Establishing financial boundaries is essential for both parents and emerging adults to ensure there is a mutual understanding, respect, and accountability. Without clear boundaries, misunderstandings and conflicts can arise, jeopardizing the relationship and hindering the emerging adult’s financial growth and independence. These boundaries help clarify responsibilities, expectations, and promote healthy money management habits. By setting limits on financial support and expenses, parents empower their emerging adult children to develop budgeting skills, prioritize needs over wants, and make informed financial decisions.

Being Upfront and Honest about Costs and Expenses:

Honesty is important when discussing costs and expenses with your emerging adult. Open communication builds trust, encourages accountability, and enables you both to make informed decisions about financial matters. Start by providing your emerging adult with a clear overview of household expenses, such as rent or mortgage payments, utilities, groceries, and other recurring costs. Break down these expenses and discuss how they impact the family budget and financial resources.

Also, be upfront about your expectations regarding their financial contributions. Clearly communicate whether you expect them to contribute financially to household expenses, such as rent or utilities, and if so, how much and under what terms. This is a great time to also determine realistic limits on financial support and expenses, taking into account both your financial capabilities and their ability to contribute. Encourage your emerging adult to take ownership of their financial obligations and seek opportunities to increase their income or reduce expenses.

Encourage Financial Independence:

We need to empower emerging adults to take control of their finances and make responsible decisions. Provide guidance and support as needed, but encourage them to develop budgeting skills, save for future goals, and prioritize financial independence. You are the model of these things so show them healthy financial habits and behaviors they can work off of. Demonstrate responsible money management practices, such as budgeting for daily living and for larger goals such as a new car, show them how you are saving, and avoiding unnecessary debt. Schedule regular check-ins to review financial progress, address any concerns or challenges, and make adjustments as needed. Expect missteps. Use these check-ins as opportunities to reinforce financial goals and celebrate achievements. Encourage your emerging adult to pursue part-time or summer employment opportunities to earn income and gain valuable work experience. Working not only provides financial resources but also fosters independence, responsibility, and self-reliance.

 Teach your emerging adult the importance of budgeting and saving by helping them create a budget, set savings goals, and track their expenses. Encourage them to prioritize needs over wants, avoid impulse purchases, and allocate funds towards long-term financial goals. Educate them about the basics of credit and debt management, including how to establish good credit, avoid excessive debt, and use credit responsibly. Emphasize the importance of paying bills on time, maintaining a low credit utilization ratio, and monitoring credit reports regularly. Be patient, understanding, and willing to provide assistance when needed, while also encouraging independence and accountability.

 Using a kind yet firm tone of voice, and voicing your confidence in their ability, you can help by being upfront and honest about costs and expenses, establishing clear guidelines, and building financial independence, parents can empower the emerging adult to make informed decisions and thrive financially.