Hello, 

Interestingly enough, roughly one or two weeks after we uploaded The Bank of Dad – Closed for Business! (Part 1), Barron’s newspaper featured an article about parents funding their adult children’s living expenses and considering what’s best for the parents, given their lifestyle, income, and financial position (net worth).

In case you happened to miss Part 1 of this series, we discussed Netflix’s new pricing and usage regime. And whether I should continue paying for my three adult children’s Netflix subscription – click here.

In that post, on the surface, I was griping about Netflix. But. . . 

The substance was about when a parent should stop covering their adult children’s living expenses and ‘require’ them to be self-sufficient, own their destiny, and accept responsibility for their lives and livelihood.

To be fair, my three children Are self-sufficient and great people too!

But I have been paying for the Netflix Family Plan since early 2007, pretty much Netflix’s beginning when I left the marital residence. Yeah, my children were little kids then, but now they’re adults and in the workforce.

Realistically, the Netflix subscription at $27.08 per month is not that much money and in and of itself won’t break the bank. But. . .

The Barron’s article hit the nail on the head:

  • When should parents focus on their own finances, net worth, saving for retirement, etc., and reduce or stop funding their children’s living expenses?

In fact, the article title is: ‘How to Help Your Kids without Hurting Yourself’ by Elizabeth O’Brien.

O’Brien quotes Monica Johnson, a sociology professor at Washington State University, “For most families, the bigger concern is that financial assistance to grown children will cause the parents to save less for their own retirement – potentially risking a situation where the children need to step in to support their elderly parents down the line.”

And that’s exactly the concern.

To bring this point down to dollars and cents, if you give more money away you have less money to save for your retirement, pay down debt, and take a nice vacation.

Does this situation happen to apply to you?

Certainly Food for Thought!

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The Secret is to dive into your personal spending plan. 

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Turning back to our own retirement planning. . .

I figure that a decent percentage of us will live well into our 90’s.

That’s a long time in retirement which requires significant resources!

Resources include stocks, bonds, mutual funds, money market funds, retirement plans, annuities, etc., and perhaps most important, good health.

Money in the bank and assets to fund your living expenses during your retirement years.

My Dad died earlier this year just before his 93rd birthday. Unfortunately, my Mom passed at 76.

The point is that every dollar a parent gives their children means one dollar less that they can save for their own retirement and spend.

Not to mention reinvesting interest, dividends, and capital gains distributions to compound your money, realize interest on interest, which is compound interest, also referred to as compound returns. 

Compound interest/compound returns Take Time to maximize your benefits. In other words, it Takes Time to really build wealth.

And building wealth requires money for investment!

The key is to click off Netflix right now – at least for tonight – and:

  • Create a personal budget and spending plan. Or revise your personal budget and spending plan.

  • Calculate how much money you are likely to need to retire. In other words, how much money will you realistically need to fund your living expenses in retirement? Remember to take into account annuities, pension income and expected Social Security benefits.

  • Update your net worth statement, also called a Personal Financial Statement (PFS). Get a realistic picture of where you stand today.

  • Estimate how much your entire investment portfolio is likely to grow between now and when you plan to retire. Calculate several scenarios – best case; likely case; and worst case. Be sure to meet with your financial advisor who can run financial projections.

  • Calculate the gap – the difference between your net worth today and the amount of money you want to accumulate by the time you retire.

  • Write down your current income and expected income between now and when you plan to retire.

  • Then, review your financial goals and analyze where you stand.

  • Design a financial plan or update your financial plan to gain a current understanding of what steps you have to take in order to achieve your financial goals and retire on schedule and be in a position to enjoy the retirement you want.

Then, Realistically figure out:

  • Is it likely that your income, for example, salary, bonus and healthcare benefits; between now and your target retirement date; will stay constant, increase or decrease?

  • What is the probability (risk) of getting laid off?

  • If you do get laid off, how long would it take you to land a new job? And. . .

  • What’s the likely salary and benefits package the new employer will offer?

  • And how might or will any reduction in your income and benefits impact your ability to save for retirement? And. . . 

  • Avoid using your savings and tapping into your investments, your investment portfolio?

  • If you have established an emergency fund, is the money you’ve accumulated (your account balances) sufficient to cover your living expenses during the time you could be out of work? Or will you have to tap your savings, investment portfolio or retirement accounts? Which would clearly be a setback!

  • And is it worthwhile to reduce expenses now to provide a cash cushion, save more for retirement and build more wealth?

  • If you contribute money to your children, for example, cover their living expenses, will you Still be able to achieve your financial goals? And. . .

  • Live the retirement you want?

For what it’s worth, I continually look to cut my expenses and in particular, eliminate wasteful spending to free up money for other areas and save more money for retirement.

And who knows, maybe I’ll finally take that long-awaited trip to Tuscany, after all.

Be Realistic! 

Then implement your financial plan and monitor your results as you go.

Modify your spending and saving depending on what happens.

Again, if you contribute money towards your children’s living expenses, just to bring this point into the spotlight once more, you’ll have less money to build wealth, save for retirement, pay down debt and take a nice vacation.

Not necessarily easy questions to answer or easy decisions to make!

But important decisions and potentially life-changing decisions!

Please get on this right now!

Arthur V.

P.S. To Save More Money Every Day – click here.

Barron’s featured ‘How to Help Your Kids without Hurting Yourself’ in the June 16, 2025 edition. Journalist: Elizabeth O’Brien

Budget and Grow Rich® – ISSN: 2992-9296   – USA International Standard Serial Number

Disclaimer: OH and Please Remember, we are Not financial advisors, financial planners, attorneys or accountants and are Not providing any specific financial, tax or legal advice here. Be sure to conduct your own due diligence and consult your own professional advisors to get sound professional advice that’s specific to your financial and personal circumstances, risk tolerance, time horizon and investment goals and objectives among other key factors!

 
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The Bank of Dad – Closed for Business! (Part 1)