How To Develop Financially Resilient And Responsible Children

There is an old proverb: “Hard times create strong individuals; strong individuals create good times; good times create weak individuals; weak individuals create hard times.”

I think of this proverb often when I work with clients who have some wealth and want to help their adult children . Given the costs of real estate and other expenses of life, many Canadians in their 50s, 60s and 70s are in meaningfully better financial shape than their children and want to help.

There are usually three core questions when it comes to financially helping adult children : Can I afford to help them with $x each? One needs the funds, the other two don’t, so how do I manage that? How can I make sure they use the money wisely?

Regarding affordability, good financial planning can really help you to see with confidence what your financial situation will likely look like through to the end of your life. By comparing gifting and not gifting, you can see whether you can easily afford to gift a certain amount of money today.

On the second question, the general rule of thumb is to give to all your children equally, whether they need it or not. There can be extenuating circumstances that lead to a different decision, but under the guidance of avoiding the mother-always-loved-you-best syndrome, we aim to give equally.

On the third question, it takes a lifetime of parenting to help improve the odds that your adult children will spend money wisely.

My oldest child is 24 and has been running her own business for a few years. She was buying a car and wanted me to go with her to the dealer. As I sat there and watched her negotiate, she was really tough. She didn’t give an inch. She was prepared to walk away if she didn’t get her deal.

Eventually she got pretty darn close to what she was asking for. I told her how impressed I was, but also that I probably would have taken their second-last offer. She said, “I worked hard for that money. Let them work hard for theirs.”

Imagine how that conversation would have gone differently if I were paying for her car and she was negotiating. I can guarantee we would have paid more for the car.

It reinforced a lesson that I have tried to teach my kids. My wife and I often tell our kids, “We have some money … you are poor.” As it turns out, that isn’t true for my daughter anymore, but the message was important: whether their family has money or not, they are young and have to build their own wealth. It is on them.

Of course, not everyone has the same set of skills to build their wealth and not everyone wants to. Some people are born spenders; others are born savers. The key is to build a foundation that allows them to be as successful and responsible as they can be with finances.

There are four ways to improve those odds.

First, try to teach the connection between working and making money from a young age, whether it’s paying $5 to complete a specific chore or encouraging them to have a lemonade stand or go door to door with a snow shovel after a storm.

This can best be exhibited when they want something that is expensive. Rather than being given something without having meaningfully contributed, these are often the opportunities to say, “I will get it for you if you contribute by doing xyz.”

Second, try to encourage the value of education since better education will generally lead to a higher-paying job as well as the ability to be a better consumer and investor.

Third, say no sometimes. I feel like my mother said no to a lot of things when I was a kid. I am not sure that we have said no nearly as often to our children. But you can’t always get what you want when you want it. Sometimes, you can’t get it at all. Sometimes, you need to work for several years before you can get it.

There is a lot to be said for delayed gratification versus instant gratification. This is at least partially a learned skill and one that is ideally taught early on, but it can be effective for 35-year-olds as well.

Some 60-year-old parents look at their financial situation today and think that 30-year-old children should be able to do the same things and live in the same neighbourhoods.

I like to remind the 60-year-olds where they lived and what they had when they were 30. They usually reminisce about some place that was rough around the edges, how all their money went to the mortgage and how they couldn’t afford to do too much else. I ask them if that helped to teach them lessons about money and saving . They always say yes. I then ask them how their kids are supposed to learn those same lessons.

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Fourth, be open with your children (teenagers and up) about family finances . Fundamentals such as learning about credit card payments, mortgage payments and registered retirement savings plans can all be reasonably understood along the way.

The other benefit is understanding their family is a team. If things are going well, everybody sees some benefits. If things are going poorly, everyone needs to understand there will be belt-tightening. But this isn’t always a sign of big problems or impending doom; it is the reality of life and the economy and kids need to learn how to ride it out.

Having financially secure children and grandchildren isn’t so much about the size of their inheritance as it is about the financial muscles they have been taught to build. Maybe that is the most valuable legacy you can leave them.

Ted Rechtshaffen, MBA, CFP, CIM, is president, portfolio manager and financial planner at TriDelta Private Wealth, a boutique wealth management firm focusing on investment counselling and high-net-worth financial planning. You can check out our 2026 Canadian Retirement Income Guide through www.tridelta.ca.