Personal Finance

Finance expert Dave Ramsey warns parents to not let their "safety net become a hammock" for their children

Joey Frenette

Published: October 11, 2024 5:45 am

Last Updated: February 7, 2025 11:25 pm

Dave Ramsey is an incredibly popular financial advisor known for giving his take on a wide range of individual financial situations. Indeed, many of the cases Ramsey provides advice on aren’t very straightforward cases. Some are very specific, peculiar, and need a bit of fine-tuning.

Though you probably won’t find your exact predicament highlighted on a Dave Ramsey show, there are still many reasons to tune in to take the man’s words of wisdom. Even if you’re not calling in, his shows tend to give a lot of food for thought, not to mention the small bits of advice that you may find fit your specific needs.

In this piece, we’ll look at an article published by Mr. Ramsey on his website that should be relevant for all parents of adult children.

Key Points From 24/7 Wall St.

• Dave Ramsey wants parents who help adult children to find the right balance.
• There’s a way to help financially without eroding a child’s independence and resilience.

It’s natural to want to help one’s kids amid tough times

Indeed, if you’re a parent with a sizeable nest egg, you may obliged to crack open your nest egg to help your children thrive rather than just survive, especially after the horrific inflation hailstorm.

After the last several years, the costs of virtually everything have swelled at a historic pace. For the Millennials, the post-pandemic inflation wave acted as just another big, unfortunate roadbump in their windy financial journeys. They graduated into the Great Financial Crisis only to hit another setback amid pandemic lockdowns and the inflation that followed around a dozen years later.

Compared to the Baby Boomers or Generation X, Millennials (and now Gen Z) have been dealt a pretty tough hand. Many Millennials and Gen Zs still face challenges breaking into the housing market. As they have kids of their own (Generation Alpha), today’s parents of adult children may feel guilty living in a large home that’s paid off with a sizeable saved sum for retirement.

Although it’s natural to want to spread the wealth to loved ones earlier rather than later, especially since the affordability crisis is unfolding today, it’s vital that some balance is met. Ramsey noted that financially supporting children without the right checks in place can lead to issues that lead to a “safety net” (which Ramsey highlights as a good thing) turning into a “hammock” (something Ramsey advises against).

Finding the optimal balance is key.

As with most things, the right balance has to be struck. And in the case of financially supporting children, one wants to avoid being labeled as the bank of mom and dad. Lean too heavily on the bank, and it’s not just one’s retirement nest egg that will erode, but the opportunity for one’s children to learn the value of being independent and staying resilient through the toughest of economic environments.

Ramsey is right. It’s a good thing to lend a helping hand when a child is behind on their rent. Your nest egg isn’t just a means to fund a lavish retirement for yourself but also a safety net to help catch a child should they fall into unfortunate financial circumstances.

That said, Ramsey thinks things start becoming problematic if adult children have excessive expenses covered (think phone plans and all the sort) such that they give the wrong incentives (delaying the job search or being fine with prolonged unemployment).

Indeed, it can be challenging to encourage stoicism, resilience, and independence amid significant setbacks. That said, Ramsey believes that overprotective parenting can pave the way for unemployment or even mental health issues in adult children.

The bottom line

Ramsey suggests intentionally allowing one’s children to engage in “hard things” so that parents don’t unintentionally turn a safety net into a hammock of sorts.

By helping with the necessities (rent or even a down payment on a mortgage) and not the comforts (think streaming services and phone plans), perhaps parents can find the sweet spot to help their children without impairing an adult child’s personal growth.