A path to financial independence

Start by evaluating your own finances. For many families this is a chance to reassess the family budget and see how much help they can afford to give their children without torpedoing their own budget and retirement savings.

Set limits

Darryl Dahlheimer, a certified consumer credit counselor in Minneapolis, tells his clients to plant a seed of financial autonomy by letting each child know that his college fund has a limit. If your child chooses a school that costs more than what you have saved, it's up to him or her to make up the difference.

Encourage independence

Suppose your child has graduated from college but has returned home to live. Instead of telling him how much money you think he will need to get his own place, Clark suggests you have him come up with a figure—and a plan for how he is going to afford it. "Ask him what amount of money he thinks he'll need to be standing on his own feet in four years," he says. "This will help him to be more self-sufficient before he even thinks about packing his bags." Then you can set an approximate date for his departure. If he has a job, you may also want to start weaning him off your checkbook by having him pay you rent that matches the amount you came up with for his future apartment.

Be loving but tough

Every action you take, such as subsidizing rent or paying off a credit card, sets a precedent. So hold the line. Avoid renegotiating, and be prepared to follow through on conditions you've set. For example, if your child needs a computer for graduate school, it's fine to make the purchase with the caveat that if she doesn't achieve certain grades, you want it back.

Help wisely

Once your kids do move out, you may want to give them a helping hand until they can fully support themselves. What's the best way? Ellie Kay, author of "Living Rich for Less" (WaterBrook Press, 2008) and the mother of seven kids, suggests that you subsidize food or clothing expenses rather then helping with rent. "Paying rent is the big thing that makes them an adult," she says.

Consider covering insurance

For many parents it is easier and cheaper to carry a child's auto insurance on the family policy than having him buy a high-cost policy on his own. That means your policy will cost more, so ask him to pay you the difference. Dahlheimer adds that children who are covered by their parents' insurance tend to have more accidents, so you may want to tell your child that if he has a mishap, he can buy his own policy next time. (You can overlook accidents that clearly aren't his fault.)

Some parents add grown-up children to their health policies if the kids don't have good health coverage at work. But that is not always possible or affordable, so check with your health insurance carrier to be sure.

Don't co-sign loans, at least not if you can avoid it

Doing so may give your son or daughter a false sense that the debt is not really his or her obligation. Moreover, if you're in the predicament that most American families are in right now, the last thing you need is more debt. There are no hard-and-fast rules here, though, so do whatever makes sense for your family.

Be ready for a 911

If your child has a financial emergency, don't immediately toss out a life preserver. One-third of all "emergencies" resolve themselves without your help, Clark says. And if you allow your child to work out a solution on her own, it will boost her self-confidence. But if she does ask for help, write out a plan and have everyone sign it. You might agree, say, to help her meet her student loan payments until she gets a new job.