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Bank of Mom and Dad Causes More Harm Than Good


 

"How can I get some money? Short of earning it, I mean."


-"Calvin" in Calvin and Hobbes by Bill Watterson

 

I'm helping my team set up for a family meeting with the firm's largest client. This client is the first generation to have significant wealth. Their children are in their 50s, but none of them are financially independent. They struggle to find meaning in their life since they have no need to find a career. They don't keep jobs for very long. They rely on credit cards to keep up their lifestyle. When they can't pay back the credit card company, their mom and dad pay their bills.


Mom and dad tell them, numerous times, that the support will be ending soon because they aren't learning how to be independent. With that warning in mind, the kids do it again. Once again, mom and dad bail them out. The kids won't be able to survive without their life support.


I don't work with that team or client anymore, but the lessons are still there.



financial enabling


Statistics Speak Louder Than Words


The example above was about children in their 50s, but there is a growing trend in parents of millennials doing the same thing. A recent study has shown that this is a growing concern. Here are some of the finding:


  • 7 out of 10 are getting financial help from their parents

  • More than half of those getting help are in their 30s

  • 6 out of 10 wouldn't be able to support their current lifestyle without their parent's help