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by David Koch

According to Wikipedia, a kipper is “a whole herring, a small, oily fish that has been split into a butterfly fashion from tail to head along the dorsal ridge, gutted, salted or pickled, and cold-smoked over smoldering woodchips.”

In our world, however, KIPPERS are “Kids In Parents’ Pockets Eroding Retirement Savings.” Unfortunately, these KIPPERS might also be NINJAs (No Income No Job or Assets). A Money magazine survey found that 30% of parents helping to support grown children spend more than $5,000 a year on their kids.

As wealth advisors, we are deeply “invested” in the successes (and unique challenges) of the families we work with. By acting as our clients’ Guides, Gurus, and Gladiators, we hope to help them avoid the Curse of the KIPPERS, and help champion their kids’ transitions into successful adults. Ideally, these transitioning adults will arrive at a place of satisfaction and independence in their financial lives, and might even possibly become HENRYs (High Earners, Not Rich Yet)—soon.

The challenge parents face is finding the sweet spot between speaking up—and risking pushing their children away and potentially triggering a less-than-optimal outcome. This article will outline some productive ways for you to break the ice, start talking about money with your adult children, and help them stay on the road to success.

Just Do It

A journey of a thousand miles begins with a single step. That’s why the first suggestion is to simply start the conversation. But early conversations shouldn’t devolve into criticizing your kids’ spending habits—it is simply enough to ask what money means to them.

For some, money is security, for others it is freedom; for some it is a goal, for others it is a means. If you’ve found yourself awestruck at an obtuse comment from an adult “child” about money, it is often because you and he (or she) approach the concept from completely different points of view.

There are poor people who sleep well at night, and there are wealthy people who toss and turn agonizing about the balances in their financial accounts. Find out where your children stand. Once you understand where their starting point is, you can begin to engage them in more meaningful conversations.

Admit Your Own Mistakes

Tell a story about one of your own foolish decisions. Did you buy a Porsche right out of dental school? Did you put $10,000 into stock in 1999? Did you buy an investment property in Florida in 2006? Did you loan your brother-in-law $5,000 to start a tortilla company without any documentation?

We all have our own list of mistakes, and we’ve all hopefully learned from them. What makes us human is our ability to learn from others’ mistakes—and it is far less painful to learn from these mistakes than your own.

Human Capital

Be it college, or trade school, or an online course: Our adult kids should be actively acquiring the skills that will make them attractive job candidates. Even if they’re entrepreneurial, they’re not going to be able to secure funding and partnerships without a resume documenting their past successes and willingness to work hard.

If your daughter wants to become a veterinarian, for example, but still has yet to complete her prerequisites, make sure she’s at least volunteering at an animal hospital to gain the skills and letters of recommendations to get accepted.

If they’re not actively taking classes, encourage your kids to network and seek informational interviews in a field they’re interested in. In their spare time, they could read such classic how-to-achieve-success books like: Never Eat Alone, How to Win Friends and Influence People, The Millionaire Next Door, The Contrarian’s Guide to Leadership, The 7 Habits of Highly Effective People, and The Wealthy Barber.

Interviewers love it when candidates bring up the fact that they’re reading a book on successful practices—and they can articulate how they’re applying what they’ve learned.

Saving, Investments, and Debt

Everyone should have a few months’ worth of expenses in savings. For your adult children, this could mean the difference between being evicted and moving back in with mom and dad, or holding out until they find another job.

Retirement savings should start immediately with your kids’ first job. Using a reasonable rate of return, if a person saves the same amount each year during a 40-year career, what was invested in the first 10 years will grow to the same amount as that invested during the last 30 years. Hint: It’s called compounding.

Debt can bury a young saver. The $20 minimum payment on $1,000-worth of credit-card debt can take more than six years to pay off. Student loans can be especially difficult. There are strategies, however, that can be helpful. One such strategy would be to use a peer-to-peer loan and extend PLUS loans to free up cash flow. These may take some modeling, but nothing that your friendly Wealth Advisor can’t help you with.

Set Limits and Make Goals

One underappreciated advantage of having supportive parents is that it allows our children to take risks that others are not able to. It allows them to be patient and fastidious about choosing their career path. They know that if they pursue their dream and fail, they won’t be homeless. The magic is in the balance between encouraging them to take those risks, and providing them with such a cushy safety net that it (unintentionally) reinforces them for doing nothing at all.

Think beyond giving them an allowance. Help them set long-term goals and formulate the steps needed to get there. One well-cited study found that 60% of parents said they would be willing to postpone retirement to help their kids. That’s awfully kind of them, but it doesn’t need to be that way.

Finally, if you have to draw a hard line with your kids, don’t be too hard on yourself. The fact is, you’re only trying to help them become more successful.