These Families Are Shutting Down the Bank of Mum and Dad - Kanebridge News
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These Families Are Shutting Down the Bank of Mum and Dad

Parents are cutting the financial cord with their adult kids later than ever. They hope it isn’t awkward.

By VERONICA DAGHER
Mon, Feb 12, 2024 8:49amGrey Clock 3 min

The parents have been paying the monthly phone bill and covering rent for far longer than in prior generations. Some are helping their children with down payments to buy homes. Others are putting a roof over their kids’ heads well into their 20s and 30s to help them save because they can’t cover rising costs of living.

That comes with a price tag. More than a quarter of parents who are helping their children financially said it caused them to postpone retirement, according to a recent Credit Karma survey . More than half had to cut back on living expenses and about a third took on debt.

Feeling stretched, they are negotiating the terms of separation.

Nancy Clark and her then-28-year-old son, Reid Clark, had just sat down to dinner in June 2022 when the conversation turned to when he would move out. The topic had come up before, but this time they decided to set a date one year later.

Nancy, now 60, said she remembers thinking: “I know that becoming financially independent needs to feel a little painful.”

Reid set off on his own last June. He ditched a job managing his family’s three ice cream shops in New Hampshire for a gig as the assistant to a professional ice hockey team’s mascot in St. Paul, Minn. He also works at an M&M’s store.

Nancy bought him groceries when he moved in and occasionally gives $50. By this June, Reid will no longer get any financial help if he’s short. He hasn’t needed to hit up his mum for rent money in the past few months. “I want to chart my own path in life,” he said.

Taking such a gradual approach and framing the conversation around gaining financial independence give it a positive spin, said Rocky Fittizzi , a wealth strategies adviser at Bank of America Private Bank. Telling your children you’re cutting them off suggests it is a punishment.

An emotional decision

Many adult children are living at home, or moving back in, to save money. The cost of food and rent have jumped, and more college graduates are saddled with student debt. The share of 25-to-29 year-olds with student loans rose to 43% in 2022 from 28% in 1992. The rise was even bigger for those between 30 and 34, according to a recent report by the Pew Research Center.

Some 20% of men and 12% of women between 25 and 34 years old lived at home last year, far higher than two decades ago, according to Census Bureau data.

During the pandemic, layoffs and money strains forced some adult children and their parents to live together and share finances, said Arne Boudewyn at Insights Squared Consulting Group, a family wealth consulting company.

Worries over losing the close bonds forged during those years may add to the stress of ending monetary help, financial advisers said.

“Letting go is often harder for parents these days because we need to feel needed as much as we want to feel wanted,” said Bobbi Rebell , the founder of Financial Wellness Strategies, which gives workshops for parents about how to teach their children to be financially responsible.

Tough love, but not too tough

Pam Lucina still remembers the day about 30 years ago when her father told her she was off the payroll. She was in her first year of law school. Her parents had paid for her undergraduate education. Because she assumed they would pay for law school too, she had chosen a pricey school.

She graduated with $40,000 in student debt and couldn’t afford to contribute to her 401(k) for about five years.

“I know that my parents sacrificed to give me what they did and I’m grateful for all of their past support but I wish I had been more prepared,” said Lucina, 52, now an executive vice president at Northern Trust .

Lucina said the experience was a main reason she became a financial adviser. She has three daughters, and recently asked the oldest to complete her own college financial-aid form.

She tells clients that even if they have good intentions when cutting off their kids, it can feel to the children as if their parents are withholding money to punish them.

“Assure them that love is not contingent on finances,” she said.

Create an exit strategy

There are times when financial help is necessary. With a health issue or addiction, parents often use a special needs trust, where funds typically go directly to the child’s treatment and recovery. Others may opt to help children temporarily after a layoff.

But financial advisers said parents need to set boundaries.

Ashley Kaufman ’s parents told her she would need to move out of their Manhattan apartment, where she was living rent-free, once she saved $100,000 for a down payment on her own place.

The cybersecurity consultant hit her goal by the time she was 25, but she wasn’t sure she was ready to move out right then. She enjoyed seeing her younger siblings regularly and playing with her family’s dog named Waffles, she said. Her parents encouraged her to go to some open houses anyway.

Kaufman, who is the stepdaughter of Rebell from Financial Wellness Strategies, is now 27. She bought her apartment around two years ago.   She’s happy to be building equity in her place.

“I’m glad my parents gave me a little nudge,” she said.

—Julia Carpenter contributed to this article .



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Leaders with epic hobbies seem to squeeze more hours out of the day than the rest of us

By Callum Borchers
Fri, Jul 19, 2024 4 min

Many of us can barely keep up with our jobs, never mind hobbies. Yet some top executives run marathons, wineries or music-recording studios on the side. How can they have bigger responsibilities and more fun than we do?

It can seem like ultrahigh achievers find extra hours in the day. They say they’ve just figured out how to manage their 24 better than the rest of us.

They also admit they take full advantage of the privileges of being a boss—the power to delegate and the means to do things like jetting to Denmark for a long weekend of windsurfing.

Dan Streetman trains as many as 20 hours a week for Ironman triathlons in addition to his job as CEO of cybersecurity firm Tanium. It’s a big commitment for anyone, never mind a corporate leader who travels to meet with customers every week. He pulls it off by sleeping fewer than seven hours a night and waking around 5 a.m., planning his exercise sessions months in advance, and switching his brain from work mode to sport mode almost as fast as he transitions from swimming to cycling during a competition.

“I tend to work right up until the day of the race,” says Streetman, 56 years old. “I remember being on a board call on a Friday night, and Saturday morning was an Ironman. That’s just part of it.”

Ahead of business trips, he maps running routes in unfamiliar cities and scouts nearby pools, often at YMCAs. He rides stationary bikes in hotel gyms and, if they’re subpar, makes a note to book somewhere else next time he’s in town.

Leaders who eat, breathe and sleep business can appear out of touch at a time when employees crave work-life balance and expect their bosses to model it. Today’s prototypical CEO has a full life outside of work, or at least the appearance of one.

Their tactics include waking up early, multitasking and scheduling fun as if it were any other appointment. When you’re a top executive, hobbies tend to disappear unless they’re on the calendar. One CEO told me he disguises “me time” as important meetings. Only his assistant knows which calendar blocks are fake.

Ben Betts calls himself a “spreadsheet guy,” which is a bit like saying Michelangelo was a paint guy. With Excel as his canvas, Betts creates cell-by-cell checklists for just about everything he does, from cooking Christmas dinner to building a coop for newly hatched ducklings.

Betts, 41, is CEO of Learning Pool, a professional-development software maker. The duck home is part of his ambitious effort to restore an 18th-century farmhouse in England. He’s been renovating for about five years and aims to finish this fall.

On a recent Saturday, Betts’s spreadsheet called for stripping overhead beams by 5 p.m. so he could refinish them. Otherwise, the task would have to wait until the following weekend, throwing off his whole timeline. His vision of the home as a cozy enclave—completed in time for the holidays—can only come true if he sticks to a precise plan.

“Sometimes I stand in the doorway, and my wife probably wonders what I’m staring at,” he says. “I’m picturing us on a corner sofa with our two kids and the dog, watching a film in front of the fireplace I installed.”

Back in the swing

John Sicard , president and CEO of supply-chain manager Kinaxis , got back into drumming many years after he let go of his dream to become a professional musician. He practices almost every day, but his sessions sometimes last only 20 minutes. He rehearses with bandmates two or three times a month. That’s enough to prepare Sicard, 61, to play Foo Fighters and Led Zeppelin covers at occasional charity gigs.

He also built a studio in his house, where he records up-and-coming artists. He finds time by sticking to this management philosophy: “The most successful CEOs do the least amount of work.”

For Sicard, that means letting his lieutenants take charge of—and responsibility for—their divisions. Many corporate leaders work harder than they need to because they micromanage or hire poorly and pick up the slack, he says.

Thomas Hansen , president of software maker Amplitude, is back to windsurfing, a sport he competed in as a teenager. He lives near the ocean in California but gets out on the water only about once a month, when the waves are just right. Hobbies don’t need to be daily activities to be fulfilling, he says, especially if they require training regimens.

To stay in shape for windsurfing, he rises at 4:30 a.m., seven days a week, for an hour of exercise. Hansen, 54, also guards his Saturdays and Sundays like the crown jewels of Denmark, his native country, limiting himself to two working weekends a year. Things that feel urgent can almost always wait till Monday, he contends.

‘Like a badass’

When Christine Yen isn’t calling the shots at work, she’s circling a racetrack at 80 mph on her Honda CB300F motorcycle. The co-founder and CEO of Honeycomb, which helps engineers diagnose problems in their software, took up racing a few years ago.

Prepandemic, her motorcycle was strictly for commuting in San Francisco—and making an impression. She loved pulling up to investor meetings in her hornet-yellow helmet and leather riding suit.

“It fits me like a glove, and it makes me feel like a badass,” says Yen, 36.

The keys to spending full days at the track are planning and being willing to work at odd hours, Yen discovered. Her favorite track publishes racing schedules in 10-week batches. As soon as a slate is released, she circles the dates when she expects her workload will be lightest, aiming to participate in roughly half of the events.

“I have also been known to bring my laptop to the motel and get some work done in the evenings,” she says. “It sounds boring to say hobbies can be scheduled, but that’s how I protect my time.”