Confessions of a family banker
When to turn off the tap – The challenges of financial parenting
If you’re a parent, chances are you’ve paid for more than just the basics over the years. School fees, new takkies, music lessons, class trips, overseas sports events, and birthday parties – all form part of the parenting package. But what happens when those children reach adulthood, and these expenses keep coming?
Supporting your child into early adulthood is part of the job. It’s a requirement almost always undertaken lovingly. But it comes at a cost – often one that’s overlooked in long-term financial planning. And while there’s no shame or blame in helping, there’s wisdom in asking: ‘how long should I keep paying?’ and ‘at what cost to my own goals?’
Let’s unpack this with a typical scenario, an example you may find familiar.
You, the parent – and the bank
You have two kids. Your daughter is 15. She needs lifts to school and back, you’re paying for horse riding, swimming lessons, and she’s keen to try out coding this term. Fair enough – you’re the provider, and she’s still a minor.
But then there’s your son. He’s 24, has finished his studies (eventually), and is trying to find his feet. He’s not earning much yet, hasn’t found his niche, and has had several intern-like jobs. You’re still covering his petrol, insurance, medical aid, and cell phone contract. You’re also the provider of (intermittent) accommodation, clothing, and other lifestyle ‘extras’ that were all envisaged (in your own financial plan) to end after varsity.
Let’s average this out at R6 000 a month, plus another R20 000 a year in ad hoc help – gifts, holidays, birthday surprises, and bailouts. That’s some R100 000 a year missing from your own retirement savings which your advisor theoretically mapped out some years ago.
Here’s the thing: you’re not alone. Many parents continue financially supporting adult children well into their mid-to-late twenties – sometimes longer. But what seems like ‘just helping’ is compromising – if not perhaps derailing – your own financial planning trajectory.
The long-term cost of keeping the children’s money tap open
Let’s crunch the numbers. Suppose you keep supporting your adult child at (an inflation adjusting) R100k per year until they’re close to their 30’s – five years, that’s half a million rand, and if it were (heaven forbid) ten years it would be well over a million rand.
Now let’s say you were 26 when you had your son, and you’d like to stop working at 65, and you’re confident that your son’s prevailing ‘financial hiccup’ won’t be repeated by your daughter in ten years’ time…, and let’s assume your moderately aggressive investment portfolio would average a 9% return each year compounded from now, the cost to you of the well-meaning, but unplanned for five years at R100k (unadjusted for inflation) per year will have a cost to you on your 65th birthday of R1 540 000. Sobering hey!
If your daughter in nine years also at 24 years (and for now, we’ll not factor inflation into the numbers), requires the same UCSF (‘unscheduled child support fund’) and we add this to your son’s current five years, and compound this at the 9% we estimated, do you know that the opportunity cost to you as you start your (by then – theoretical) retirement at 65, of two children’s post varsity support is some R2 260 000!
By keeping the financial tap running for five years at a time, twice, you’re draining your envisaged retirement fund.
It’s not just about money – it’s about momentum
You’re not just spending cash; you’re also holding up your own financial progress. That extra cash – if managed carefully with a professional advisor – could be worth even more if it had been used to settle bonds and car purchases, or accessible for purchasing another income generating investment such as a sea-side house to rent out.
And even if it wasn’t going to be your investment, helping your child purchase their first home too has been forsaken by the funding of the USCF. And remember that your children are learning from you. You should be modelling financial boundaries and self-reliance for the next generation. Your relaxed attitude to saving is almost certainly picked up on by them.
A mindset shift: Financial support vs. financial enabling
As parents, we often blur the lines between love and obligation. Just because you can afford something doesn’t mean you should continue funding it. Think of it this way: a transition phase is fine. A permanent allowance is not. Providing a safety net is commendable. Providing a safety couch, complete with DSTV Premium and Woolies snacks – that’s a problem!
How to take control without causing a family war
Phasing out unnecessary financial dependence, while still being a caring, present parent perhaps requires more effort from you than the ad lib USCF? Set a stop date – together. Discuss a clear timeline for support. Maybe it’s six months post-graduation. Maybe it’s after their internship ends. Make it official – write it down, agree on it, and stick to it.
Swap expenses, don’t stack them
If they’re living at home rent-free, they should contribute by paying their own fuel or groceries. Encourage part-time or freelance work while they job hunt. Responsibility builds resilience.
Include your kids in the bigger picture
Explain the numbers to them. Show what the R100k per year you’re giving them now is costing you at your retirement. Let them see your retirement plans. Let them know you’re serious about your financial health – because without it, one day they might be the ones supporting you.
Planning tip: Build your own boundaries into your plan
If you’re working with a financial adviser (and you should be), factor this family support into your cashflow planning. Make space for transitional support – but put it in writing and review it annually. Your adviser can also help you project what long-term support does to your retirement. Structure funds in a way that separates ‘giving’ from ‘growing’. Create investment goals that balance generosity with personal security.
It’s not about saying no – it’s about knowing what ‘yes’ costs
Let’s be clear, this isn’t about cutting off your kids at 18 or refusing to pay for a degree. Funding your child through to the end of a commercial qualification is both normal and, in many ways, a wise investment in their future.
But what GTC is saying is that it’s the phase after formal education – those often-undefined years of ‘figuring things out’ – that need more conscious financial boundaries.
Sobering thought…
Here’s the reality: if you continue to support your adult child with an ad hoc R6 000 a month, plus annual extras like gadgets, holidays, and even their petrol money, you’re not just making monthly sacrifices – you’re giving up five (or ten) years of compound growth that could be quietly working in your favour.
Of course, they’re still your kids. Of course, you want them to have a leg up, and no one’s saying they can’t still raid the fridge or borrow your car keys from time to time. You owe it to your future self to count the cost of those generous extensions – not in guilt, but in rands and cents. Rather support them with clarity, timelines, and a shared understanding, because being a great parent doesn’t always mean funding everything. Sometimes it means knowing when to start the handover – and when to start compounding your own future again.
And if they grumble now? Don’t worry, when they’re 35 and financially independent, they’ll thank you. At least they’ll understand opportunity finance when they (and they’ll always do it) raid your fridge.
