When To Say ‘No’ To Your Adult Children

Parents should be cautious (and smart) about helping their grown children out financially. While the urge to help out your adult children when they find themselves in situations of need is perfectly natural, it’s important to think with your head and not your heart.

Worthy Investments vs. A Bailout

There are a number of life circumstances in which helping your grown children out financially can do your child lasting good; such as a down payment on a house or an education. However, when it comes to a “bailout” after your child makes bad life decisions, you should think twice before you come running with the checkbook.

Making Matters Worse

Rescuing your adult child financially can even make matters worse instead of better; for both you and them. There are three important factors to consider before you loan or outright give your grown child financial assistance.

      1. Make sure you’re not jeopardizing your own financial health.
      2. Make sure you’re not financing continued self-destructive behavior in your child.
      3. Establish clear conditions for the assistance and be willing to cut them off if those conditions aren’t met.

Not following certain guidelines when helping your adult child out financially, can lead to financial disaster and/or ruin within your parent/child relationship. Beyond just financial stress, loaning/giving your child money to support situations you may not agree with can greatly strain family relationships. That’s why it’s essential to ensure any funds you provide are helping your child move in the right direction.

If you are financially able to give your child money and you know they are trying to do the right thing, you can look at it as giving them a leg-up in life. However, if you give them money and they handle it poorly, or you don’t feel they are making good life decisions, you need to stop supporting them, in order to avoid enabling their bad habits.

Set Ground Rules and Stay Firm
Before handing over your money, it’s essential to establish ground rules, expectations, conditions and even time limits for loans. Set realistic behavioral stipulations for support that you know your child is able and willing to meet. These can range anywhere from working full-time, actively seeking work, going to school with passing grades, kicking a destructive habit or some other attainable self-bettering goal.

Once you set the conditions and expectations for your financial support, enforce them. This is the time when “tough love” can be beneficial to both you and your adult child.

Make Direct Payments

If you feel your child would waste an outright gift or loan, find an alternative way to help. This can include making direct payments to a creditor or college on your child’s behalf. Or consider using trusts with strict distribution provisions and an objective trustee that understands your concerns.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

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