Every parent knows that our care and concern for our children doesn’t stop when they hit adulthood. But most of us are a little unclear on how that care should play out financially. Trying to figure out when and how to help adult children with money problems can lead parents into all kinds of financial miscommunication and conflict.
It doesn’t have to be that way. While the best approach for you will, of course, depends on the situation, there are 6 guidelines you need to keep in mind as you make financial decisions about your adult children.
- Know your child’s Money Personality. You know better than anyone that each of your children is unique. That means they will each deal with money in unique ways. So base your decisions about helping your child based on her Money Personality and her history with money. We know a couple whose son has a long history of money problems. He’s a Flyer doesn’t think about money or worry too much about whether he has any. But when he needs to repair his car, guess who he calls? Helping him out only perpetuates this cycle. That’s very different from a child who is handles her money well, but needs a one-time loan to cover an unexpected expense.
- It’s okay not to play fair. We also see a lot of couples who feel like they need to give all of their children the same things–if one gets money, they all get money. But it really is okay to help one child financially and not another as long as you have good reasons for doing so. Naturally, you don’t want to give or withhold money to manipulate or punish your children, but it’s perfectly fine to say no to one child and yes to another. You can offer equal amounts of love without offering equal amounts of financial assistance.
- Respect each other. We’re parents too and we know someone’s always a softy when it comes to the kids. If one of you is more inclined to help your child than they other, work to find a compromise–consider giving a smaller loan or offering other kinds of emotional support. Recognize that you both want the best for your child and figure out how to give her just that. And if your partner says “no,” don’t slip your child $100 the next time she comes over for dinner. Don’t let this decision undermine your relationship with your partner.
- Don’t hurt yourselves to take care of your kids. We see so many parents who would rather decimate their own resources than see their kids struggle. But giving away money when you can’t afford it doesn’t help anyone in the long run. Protect yourselves-for your sake and the sake of your children.
- Decide if there will be strings. Most financial transactions-especially those between family members-have some kind of strings attached. If you are giving money to your adult children, be as clear as humanly possible about what you expect in return. If you want to be paid back, talk about a timeline and possible interest. If you think helping pay for a car means you get to use it now and then, work out an arrangement that everyone can agree to. If you hope for more visits or phone calls or meals together, say so. Laying out all the expectations on the front end and avoid the strife that comes with poor financial communication.
- If there are strings, get them in writing. Save everyone the drama of miscommunication and hurt feelings and write down every nuance of your agreement. No expectation is too small. Sign it, have your child sign it, and make copies for both of you. If you are expecting the loan to be repaid, you might want to consider filling out a promissory note (you can find a template on lawdepot.com) that serves as a legally binding agreement.
With a little thought and clear communication, you can protect your family from the kind of relational damage only money can do.