From Adolescence to Adulthood: How to Become Financially Independent from Your Parents

Financial independence is one of the primary markers used to designate between adolescence and adulthood.  By most American standards the average young adult should be financially independent of their parents by age 22, or about the age you are expected to finish college.  

However, only about 24 percent of young adults are actually financially independent from their parents by age 22.  While some factors such as continuing your education post-undergrad or beginning your college career later than others may affect your ability to be financially independent at that age, this does not explain the extremely low rates of financial independence in young adults and why young adults are becoming more financially dependent on parents than in past decades.  

Dependency on Parents

While the increase in the number of young adults who rely on their parents for financial stability is potentially problematic, there may be some explanations for this increase.  One of the biggest reasons that young adults struggle with financial independence nowadays is due to the exorbitant amount of student debt from undergrad or grad school programs that may take them until their 30s and 40s to pay off.  The issue of student debt is one of the largest contributors to young adults becoming more and more financially dependent on their parents, however many students leave school with little to no student debt and still find themselves dependent on their parents.

While student debt no doubt plays a large role in the number of young adults who still rely on their parents financially other factors may be in place as well.  The transition to adulthood commonly presents challenges to many growing adolescents and young adults, however, some do face bigger obstacles than others which can make this transition even more challenging.  

Some young adults may have trouble finding or keeping jobs, difficulty upholding responsibilities, or find it hard to be self-reliant.  Transitioning into adulthood is arguably one of the biggest transitions faced in one’s life, adulthood requires significantly more responsibilities than adolescence.  

So, it is pretty clear that we can see a ​​trend in the number of young adults who still live with and/or are financially dependent on their parents.  But this isn’t necessarily a bad thing.  There isn’t any evidence to suggest that young adults staying at home up until their late 20s does any harm to them or their parents.  Having a place to stay while paying off student loans or saving up to move out can eliminate much of the financial stress our younger generations face today and many young adults are grateful for their parents’ support. 

However, if finances or responsibilities aren’t monitored it can become problematic for both the parents and children.  If limits and expectations are not set on young adults, it can cause them to become dependent further into adulthood or to lack responsibility.  Dependent children may begin to take their responsibilities “lightly” or lack them altogether or begin to rely on their parents as a “safety net” for financial needs.  If this becomes apparent, you may be facing a problem.  Fortunately, there are many options and steps you can take to teach financial independence in young adults and adolescents as well as create boundaries for children to avoid dependency.          

Creating Boundaries for Dependent Children

If your young adult is still living at home or still relies on you financially, it is important to set both financial and general boundaries.  As your young adult returns home from college or due to financial hardships, it can be hard to redraw the dynamic from when they were children or teens, and it can present some challenges.  This is why it is important to redraw or create new boundaries within the household.  The following is a list of both general and financial boundaries to consider setting for your young adult if they are still dependent on you.

  • Set responsibilities and expectations as an adult.  As a young adult your child’s freedom begins to expand, but as the old saying goes, with freedom comes responsibility.  It is important to discuss your expectations for your child as they return home.  Young adults should be expected to take on more household responsibilities and work to begin supporting themselves.  You can begin putting these expectations in place with something as simple as them being responsible for doing their own laundry or that they are expected to work a certain number of hours per week.  Small steps can help to ensure that your child is ready to be on their own and independent once the time is right.
  • Encourage your children to pay their own way.  If your child is still in school, encourage them to start working part-time if they are able, so they can take on some of their own financial responsibilities such as groceries or a portion of their education.  If your child is not in school and living at home debt-free, having them pay for their own wants and needs is a good way to set financial responsibility.  This could mean having your child pay for their own phone bill, car payments, a portion of the grocery bill, or another expense your child was not previously responsible for.  
  • Don’t indiscriminately give money.  In the instance that you are physically giving your child money for their wants and needs (rather than providing them with a place to live or covering education costs), it is important that it is not just given out whenever asked for.  Providing money should be based on your child’s efforts towards independence, if they are not working to earn their own money, they haven’t earned yours.  
  • Agree on limits.  If your child is returning from home, it is important to agree upon limits for the amount of time they can stay home and what they can and cannot do under your roof.  If you are supporting your child financially from a distance, be sure to set limits on how much support is allotted and communicate what your expectations are as far as your child’s financial contribution.  It may also be a good idea to agree upon decreasing contributions as your child gets older and is expected to take on more financial responsibility. 
  • Be available to help, but don’t impose.  Let your child know that you are always available for help as they need it, but it is important that they learn how to resolve their own crises.  Allow your child to come to you for help and don’t force your help upon them.  This can help your child feel that they are more in control and responsible for their own choices and actions.       

Teaching Financial Independence 

One of the best ways you can help your child become financially independent as they enter adulthood is by teaching financial independence.  Teaching your kids how to be financially responsible and budget so they can live on their own is an essential step to their success as they enter adulthood.  Here are some strategies that may help your young adult become financially successful into adulthood:

  • Talk about budgeting.  Teach your kids to set a budget so they know where their limits lie as far as “spending money” goes.  Within budgeting, parents should talk about how to save money as well as the importance of good credit by paying bills on time.  Being sure to pay your bills on time can be much easier with automated billing, teaching your young adult about these tools can help them out a lot as they are just beginning to take on their own financial responsibilities.  
  • The importance of saving.  Some teens and young adults don’t quite get why it is important to save your money.  However, in life, certain crises may occur that will require financial assistance, which is why it is always good to incorporate savings into your budget.  
  • Making investments.  Investments are important for saving and keeping your money, but buying a house isn’t the only form of investment you can make.  Setting up a 401k or similar attribute helps you save for the future.  Teaching your kids about high-yield savings accounts and no-fee checking accounts is a good way to earn and save money as well.  In addition, teaching kids about the stock market and how they can invest their money wisely for potential gain can also be a good way to save and earn money, as long as it is done appropriately.   
  • Instill leadership skills.  Leadership capability is a pretty strong indicator of success in an individual.  Leadership skills include responsibility, collaboration, problem-solving, reliability, integrity, and the ability to teach or mentor.  Try to work on identifying and building leadership skills in your child, while also allowing them to take the ‘lead’ on how to become a leader in their own lives.

How Momentum Young Adult Therapy & Gap Program Can Help 

If your young adult is struggling with taking on financial responsibilities and/or the general responsibilities that come along with adulthood.  Our approach to young adult therapy may be a great option for your child.  Our program works by providing young adults with the opportunity to step away from their current environment, which may be chaotic or problematic, and providing them with a supportive, therapeutic space to focus on themselves and their needs. 

At Momentum, students have the chance to slow down in an environment that fosters self-reflection.  They also get the opportunity to practice essential life skills, which they will take with them once they transition to independent living.  Our program also emphasizes family involvement in an individual’s journey to success. Through parent education and collaborative workshops, we offer parents the opportunity to develop the skills they need to help support their young adult child, while still creating healthy boundaries.  

Momentum is Here to Help

Momentum is a young adult therapy and wellness program for those between the ages of 18 and 25 who are struggling to succeed as a young adult and/or meet their goals toward independence. Our program aims to inspire change in young adults to help them become more responsible and independent in the real world.  Students are taught how to connect with the world on a deeper level, foster genuine relationships, and develop their own personal identity.  At  Momentum, we give our students the tools they need to become independent from their parents, create their own lives, and get on track to a happy, healthy, and successful future.

If you’re interested in learning more about our young adult therapy program at Momentum, please call us today at 877-296-8711 today!           

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