Rule No 1: Set an expiration date.
It’s not hard to end up with an adult child on your credit card — and it can feel awkward to ask them to surrender it.
Have an expiration date Elaine King, a certified financial planner and founder of the Family and Money Matters Institute in Miami, says it’s best for financial help to be time-limited. She recalls her father giving her a credit card and specifying that it was for emergencies while she was in college. She knew exactly when she would return the card.
Show them how to apply for their own card It can be tempting to delay applying for their own credit cards if they already have access to plastic. But young adults 21 and older who have an income can likely qualify for credit in their own name. This affords them financial privacy and helps them build credit independently.
Check your own finances It’s common for parents to be unaware of exactly how much they are spending on their adult children — the family phone plan, Netflix and perhaps highway tolls don’t feel like additional expenses if you’ve always paid them. It may not even dawn on you until you’re looking at retirement and calculating monthly spending. The amount can be startling, says certified financial planner Lynn Ballou of EP Wealth Advisors in Lafayette, California.
Ballou recommends discussing specifics, such as expenses you’ve been paying that will become their responsibility. If transferring those expenses incrementally makes the most sense, agree on how and when. She suggests following up with “a loving email memorializing the conversation.”
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