Talking to Adult Children about money: Balancing Fairness in Unequal Circumstances

Some children are better off than others due to circumstances, life choices or other reasons, but as a parent or a grandparent wanting to help manage family dynamics should try to remember that family dynamics can get tricky when one child is better off than another, but fairness doesn’t always mean equality

Recognize that each child has unique circumstances, strengths, and challenges. Avoid comparing them or making assumptions. Emphasize the values and principles that unite your family, such as hard work, responsibility, and generosity.

Encourage your child to reflect on their own financial decisions and goals. Tailor your support to each child’s circumstances. For instance, helping a struggling child with rent doesn’t require giving an equivalent amount to a more financially secure sibling. Example: "I know you're struggling with debt, but I'm proud of you for taking steps to address it. Let's work together to develop a plan to get you back on track. "

Help them identify areas for improvement and develop a plan to achieve their objectives. Put yourself in your child's shoes and try to understand their perspective. Explain your reasoning openly to avoid resentment. For example, “I helped your sibling because they needed it, but I hope you know that I value and support you equally.”

Acknowledge and celebrate your child's financial successes, no matter how small they may seem. This helps build confidence and motivation.

If direct financial support isn’t feasible or fair, offer help in other ways, such as providing childcare, sharing advice, or gifting heirlooms.

Involve the family in discussions about inheritance plans or other ways you intend to balance support. This avoids surprises and fosters mutual understanding.

By emphasizing fairness over strict equality and communicating openly, you can help preserve harmony while supporting your children in meaningful ways.

Discussing money with adult children is an opportunity to strengthen family bonds and instill lifelong financial habits. By fostering open communication, setting thoughtful boundaries, and addressing fairness with sensitivity, we can guide our children toward financial freedom while maintaining balance and harmony in the family. Remember to prioritize open communication, empathy, and understanding, and to focus on shared values and goals

The Bank of Mum and Dad can we support Without Straining Relationships

Financial support from parents can be a blessing, but it requires clear boundaries and mutual understanding. The first step is for you to establish what you're willing and able to provide and communicate these boundaries clearly. Clearly define the nature of the support upfront, do you want it to be a gift. a loan, or advance on inheritance. Putting it in writing can prevent misunderstandings. Avoid making promises you can't keep. Prioritize essential expenses, such as rent/mortgage, utilities, and food, over discretionary spending.

Offer what you can comfortably afford. Explain to your children why it’s important to maintain your financial independence, e.g., “I want to help you, but I also need to ensure I have enough for my retirement. “ If you’re unable to provide support, be honest but kind. Offer guidance instead, such as helping them create a budget or exploring other resources.

Tie financial support to a learning opportunity. For instance, helping with a down payment might come with a discussion about managing mortgage payments. Encourage your child to take ownership of their financial decisions and responsibilities. Offer guidance and support, but avoid doing things for them.

Consider a "gift" approach: Instead of loans or handouts, consider giving your child a "gift" of financial support. This can help them feel more independent and less indebted.

Review and adjust: Regularly review your financial support and adjust as needed. Be open to changing your approach if it's not working or if your child's circumstances change.

Example: "I'm happy to help you with your rent, but I want to make sure you're taking care of your other expenses. Can we review your budget together and see where we can adjust?"

By balancing generosity with practicality, you maintain trust while empowering your children to make sound financial decisions.

Starting the Conversation: Creating a Positive Dialogue Around Finances

 The holiday bills are starting to arrive and everyone is feeling the pinch. Many of us struggle to make ends meet, but we are always ready if we can to help our children or our grandchildren. Opening discussions about money can feel awkward, but setting the right tone makes a world of difference. To create a positive dialogue around finances, choose the right time and place: Choose a relaxed setting, like a family dinner or a one-on-one coffee chat, to make the conversation informal and supportive rather than pressured. Avoid discussing finances during stressful or emotional moments.

Begin by acknowledging your child's independence and expressing your pride in their accomplishments. This sets a positive tone for the conversation. Share your financial journey, including successes and mistakes, to break the taboo and model that finances are a topic worth discussing. For example, say, “When I was your age, I learned some hard lessons about budgeting. I’d love to share them with you, so you don’t have to make the same mistakes.” By using "I" statements: Instead of saying "you need to," say "I've noticed" or "I'm concerned about." This helps your child feel less defensive and more receptive to your concerns.

Discuss your shared values and goals, such as financial security, independence, or building a safety net. Frame conversations as collaborative rather than authoritative. Questions like, “What are your financial goals?” or “How do you feel about managing money?” invite dialogue. This helps your child understand your perspective and feel more connected to the conversation.

If asked, share your own financial experiences, successes, and challenges. Be open about your financial situation, and avoid hiding information or making assumptions. Encourage questions and feedback: Create a safe space for your child to ask questions and share their thoughts. Listen actively and respond thoughtfully to their concerns.

Example conversation starter: "Hey, I wanted to talk to you about our family's financial situation. I'm proud of the progress you've made, and I want to make sure we're on the same page. Can we discuss our goals and values around money?" By making the topic approachable and empathetic, you pave the way for ongoing, productive discussions about money.

Is CPP an entitlement? Short answer yes it is .

 The argument about CPP being an entitlement and how the government is ripping us off through the CPP payment system appears to be making the rounds of social media again.CPP stands for Canada Pension Plan.  Here is another (my) explanation of how CPP works and where the money goes.

Where Did the CPP Money Go?

As a working Canadian, you and your employer contributed to the Canada Pension Plan (CPP) throughout your career. Together, these contributions total approximately 11.9% of your pensionable earnings annually (5.95% each as of recent years). Over a typical working life, this adds up to a significant amount. For example, if your average income was $30,000 annually, your total contributions—yours and your employer’s—would be around $214,200. That’s a sizeable investment in your future retirement.

But let’s clarify a common misconception: the government doesn’t directly contribute to the CPP. Instead, the CPP operates as a self-sustaining public pension fund. Contributions from workers and employers are pooled and invested in a diversified portfolio managed by the Canada Pension Plan Investment Board (CPPIB). This is why your CPP payments are not considered a “government handout” but rather a return on the contributions you and your employer made.

Does the CPP Generate Enough Value?

If we consider the potential growth of your contributions over a lifetime, it’s easy to wonder if you’re getting back what you put in. For instance, if your $4,500 yearly contributions (yours and your employer’s combined) grew at a modest 5% annual return over 49 years, the total could exceed $890,000. Drawing just 3% of this annually would provide over $26,700 per year in retirement income for 30 years. Alternatively, purchasing an annuity could yield a steady monthly income well above what CPP provides.

But here's the catch: CPP isn't just about individual accounts growing over time. It’s a social insurance program. It pools contributions from all participants to ensure benefits for current retirees, disabled individuals, and surviving family members. Your contributions don’t sit in a personal account; instead, they fund today’s benefits while your future benefits come from tomorrow’s contributions.

Is CPP an "Entitlement"?

Referring to CPP as an "entitlement" has led to some frustration. After all, you've paid into the program with your hard-earned money. But in public policy terms, "entitlement" simply means that you have a legal right to receive these benefits, unlike programs funded solely through tax revenues.

Why Are There Funding Challenges?

Concerns about CPP’s sustainability have led to reforms over the years. The government has increased contribution rates and introduced investment reforms to ensure the fund remains solvent for future generations. Borrowing from CPP funds for unrelated spending would be illegal, and such a practice does not happen. CPP contributions are separate from the federal government's general revenue.

Seniors’ Financial Concerns

Many seniors feel financial pressure despite CPP and Old Age Security (OAS) benefits. While these programs provide a foundation, they’re often insufficient to cover rising living costs. These programs are designed to replace up to 37% of your earned income from when you were working. Other sources of income, such as your  pensions, and private savings, make up the rest of your retirement income. At the same time, Canada supports various humanitarian and international aid efforts, which some see as a misalignment of priorities when seniors struggle at home. These concerns highlight the need for balanced policies that address domestic and global responsibilities.

Conclusion

Your CPP benefits are not a charity—they are a return on your lifetime contributions. While the system has its limitations, it’s structured to provide stable, predictable income for retirees and other eligible recipients. Continued vigilance and informed advocacy are essential to ensure CPP meets the needs of all Canadians without unnecessary confusion or misunderstanding about how the system operates.

The CPP as a carefully managed fund with clear limitations, while addressing common frustrations with a balanced perspective.