By Julie Jaggernath
We all know that “someone” – a sibling, friend, relative, or colleague – when they run short of cash, a quick call to the bank of Mom and Dad solves their problems. As parents, we want the best for our children, no matter how old they get. And if we have means, it’s even harder to stand by and let them bail themselves out of their money troubles. But even if we’re able to help them out, without jeopardizing our own financial situation, should we?
Personal finance experts tend to agree, bailing healthy, employable adult children out of their own spending problems doesn’t do them any favours. And if you’ve helped your kids in the past, going forward, if you really want to help them be successful, find ways to be supportive without throwing open the vault as they figure out how to manage their affairs on their own.
Here are 4 reasons why bailing adult children out financially is a bad idea, and what to do instead:
1. It Can Jeopardize Your Own Financial Future
Bailing your adult kids out of their money troubles can put your own financial future on shaky ground. Parents don’t have the same timeline and ability to recover from a financial setback, and kids who aren’t good with their money, likely won’t be able to help you out should you run into troubles later on.
Most people underestimate how much aging will cost; from paying for emergencies, making a comfortable retirement life, to medical costs, or seniors accommodation – money that you’ve worked hard to save, keep it safe. There are other ways to support a child going through a tough financial time.
2. You Don’t Want to Reward Bad Behaviour
Remember those tantrums your toddlers threw to try and get what they want? It was bad enough when the kids were little; throwing a tantrum as an adult, you’re setting yourself up for elder abuse if the arguments continue. Reinforcing bad behaviour by giving in to your child, at any age, is something you want to avoid.
3. It Can Be Hard to Treat Kids Equally When Going Above and Beyond for One of Them
Money doesn’t tend to bring out the best in people and feeling shortchanged or less loved only adds to feelings of resentment, hurt, and jealousy. If you help one child more than another, this can build resentment and cost you your relationship with your other child or children. The child you’re not helping may also be worrying about what their financially dependent sibling is doing to your well-being. The last thing you want to have happen is that your children grow to resent each other.
4. Independence Leaves a Strong Legacy
When employable, adult children get used to receiving your help, you are encouraging their dependence on you. One day when you are no longer able to help them, fostering their senses of independence, self-reliance, and self-confidence will allow them to manage successfully on their own. That is a legacy to leave for your grandchildren as well.
You Can’t Help Your Kids If You Neglect Your Own Well-Being
During the emergency instructions at the start of any flight parents are instructed to put their own oxygen mask on before they help their child put theirs on. Have you ever thought about why that is? The reason applies to our finances too. Without first taking care of your own well-being, you will be in no condition to help your child. No parent wants to see their child suffer. So it is essential that you shed your feelings of guilt and look after your own well-being first. By remaining happy and healthy you are better able to support your child through the tough times and leave them with an enduring legacy.
Ways to Give a Helping Hand, Instead of a Hand-Out
There are ways to help your adult children without being an endless ATM. For example, invite them over for a weekly meal (with leftovers to take home), assist with some childcare, lend a hand with home repairs or yard work, or gift them something tangible they need for their birthday.
As your children get older, share with them the money lessons you learned. Everyone faces adversity at some point in their lives. Life-long money skills instill confidence that you can overcome obstacles. Winston Churchill stated it well, “Success is not final; failure is not fatal.” Experiencing adversity builds resilience so that picking ourselves up the next time life hits a bumpy road isn’t as hard as the time before.
If You’re Worried About Their Credit Rating
You’ve likely learned how important a good credit rating is. Rather than give in to your own fears about what might happen if your child’s credit rating plummets, they need to learn it on their own. Having a lender turn them down for a car loan because they’ve got late or skipped credit card payments and a maxed out line of credit is a logical consequence that will quickly teach them an important financial lesson (that yes, people do care that you honour your credit obligations).
Once your child starts taking positive steps with their money, their credit rating will start to recover. Be their cheerleader, confidant, and biggest fan to make the road to recovery a little friendlier.
Limit Your Generosity and Don’t Subsidize a Lifestyle
If you do feel the need to write a cheque, put your generosity in check before providing the bailout. Be clear about why you’re helping with one particular emergency expense, rather than paying off a maxed-out credit card that you know will just get used to charge the next vacation. Helping with one expense is different than subsidizing a lifestyle your kids can’t afford. By putting limits on your generosity you’re looking out for everyone’s well-being.
When Kids Need More Help Than You Can Provide
If you’re not able to help your child get on track with their money and debt, encourage them to seek help from a non-profit credit counselling agency in their area. An impartial person can give your child the advice they need to hear, so that your relationship with your child is preserved.