Parents are covering $1,474 monthly for adult kids — what one CFP says to watch out for

There's a lender in town that's becoming more prevalent than ever: "the Bank of Mom and Dad" — a term you've likely heard thrown around before.

As many as half of parents with adult children are stepping in to financially support their grown kids, providing regular assistance for expenses like monthly groceries (83%), cell phones (65%) and even vacations (46%), according to a Savings.com study.

With the average amount spent per adult child at a three-year high of $1,474 per month, one certified financial planner has advice on what to watch out for.

Here's a common scenario: You have a plan at first of how you'll support your adult kid, but then you lose direction once emotions get involved, CFP Marcus Holzberg of Holzberg Wealth Management tells CNBC Select. To avoid this from the beginning, he suggests making sure you and your child are on the same page about what financial support will look like.

Start by pinpointing exactly where your child needs help. Do they need assistance with rent or are they moving back in with you? If it's the latter, you could set terms, such as contributing to household expenses. If you decide to provide money directly, set clear limits — like offering support for a set period of time or treating it as a loan with repayment terms. In fact, according to the Savings.com study, more than three-quarters (77%) of supportive parents attach conditions to their financial assistance.

"You're going to be the most objective about this process before you, as a parent, have skin in the game," Holzberg says. "Once the money has been given to them, the emotional factor of wanting to take care of your child is going to come into effect."

If you can, consider talking to a financial advisor to walk you through the best way to support your kid(s), so that you're there for them while also ensuring you're not sacrificing your own financial security.

When paying for your grown kid's lifestyle, or whatever it may be, it's important to encourage independence rather than letting them rely on you for too long, Holzberg adds. Share with them how you're helping out along the way, so eventually they'll be able to handle things on their own.

"If you, as the parent, are paying their bills, make sure you're also teaching them how to manage those bills," Holzberg says. "It's okay to provide a safety net — but just make sure that it still allows for room for growth."

This could look like sitting down together and going through any mobile banking app you use to pay bills so that they can see how you keep track of your expenses. If you're using your investments to cover their expenses, let them see into your portfolio and how you sell shares or move money around to make it all happen.

At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Marcus Holzberg, a certified financial planner at Holzberg Wealth Management.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every personal finance article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of personal finance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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