When Your Adult Children Need Help

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According to a recent study, nearly 60% of parents are financially supporting their adult children. Jean Chatzky on how to give responsibly

Are you, or have you ever, supported your adult children financially? If you’re shaking your head yes, you’re not alone – not by a long shot, in fact. A recent study from the National Endowment for Financial Education surveyed 683 adults, aged 18 to 39, and 391 parents of adults in that age range. Forty-two percent of the adults said they are currently receiving or have received financial help from their parents, and 59% of parents said they’ve given.

The research is quick to point out that these are not students, though many may be recent graduates, says Ted Beck, the president of the NEFE. “Statistically, about 75% of the respondents are in the 18 – 34 age group, so it definitely skews younger. But by going older, to age 39, we also captured people who had to move home or receive assistance for reasons of divorce, the loss of a spouse or job.”

The reality is we’re still in a tough economy. About 65% of the adult children surveyed said they feel the financial pressures faced by their generation are tougher than those faced by previous generations. You may not agree, but that doesn’t eliminate the problem: What do you do if your kids need your help or a roof over their heads?

* Assess the situation. Listen, there are financial emergencies, and then there are … struggles that are almost a rite of passage. If your kid can’t afford food, obviously some assistance is necessary. If he can’t afford his current lifestyle, but some adjustments can be made that will allow him to remain independent, that’s an entirely different story. Of those parents surveyed by NEFE, 37% said that they are providing financial assistance to their children because they don’t want them to struggle the way they once did. But some measure of struggle is actually good. You have to toe the line between helping your kids out of a bad situation and making a comfortable lifestyle easy for them.

* Set some ground rules. If you’ve decided help is necessary, you need to sit down and talk through what, exactly, that means. Are you giving them money every month? Will they be moving back into their old room? Both? And, most importantly, do you expect to be paid back? One piece of great news that came out of NEFE’s research is that 75% of the adult children who currently live or have lived with their parents contributed something financially. Many helped with food costs, some utility bills, and about 30% put in toward the rent or mortgage. I strongly suggest you ask them to have a stake in the household.

* Make it formal. A written agreement is a must. Make sure the document includes an end date – when they’ll move out or when your financial assistance will stop – as well as detailed information about what you are contributing, what they are contributing in return, and whether and how you’ll be repaid for your assistance. The contract should also require them to take steps toward independence, by saving some money each month.

* Don’t compromise your retirement. One of the most jarring NEFE findings, at least to me, is that 26% of parents have taken on debt to provide assistance to their adult children, and 28% have had to use money from savings, investments or their retirement. This is not an option. Not only will it set you back financially, but it could end up hurting your kids more than helping them, because down the line, when you’re not prepared for retirement, you may need to rely on them for financial assistance. If you can’t lend a hand without borrowing from your future or taking on debt, opt to assist them in other ways: Use your connections to help them land a job, offer to watch your grandchildren so parents can work weekends and bring in more money.

9 comments so far.

  1. avatar jwil5423 says:

    Wow this is really disturbing. I know we all want the best for our kids and I’m as guilty of trying to spare my kids any distress as anyone but this is a real concern. We need to teach them resilience for the times ahead because this is going to be the way of the world. Resilience is the key to having a happy life in changable times.

  2. avatar Mary says:

    While I was reading this article it was difficult to focus because all I could think of is why would it be such a crime for kids to struggle? 

    It seems that kids learn early that they are not supposed to struggle.  Adults do everything they can so that struggle is not in their vocabulary.  Whenever I go shopping I hear the kid tell the parent that they don’t want to have to eat that store brand, they want the name brand and the parents give in, often with under the breath muttering that they must comply with the kids lest they be a bit uncomfortable and cause some kind of family conflict.  Let the family do without before the kid has to wear jeans that are not designer, the father drive the beater and the kid drive the new car off the lot.  It has become the American way.  So why are we surprised when so many kids are returning  to the fold?

    All the while as we are preventing struggling we are teaching dependance.  We are excluding how to be creative with what you have, how to make use and make do and how to appreciate what one has and not what one wants. 

    My parents though not perfect presented each of us on High School graduation a certificate undated to be used in the future should we need help.  It was for One month of return living back home, after which time we were on our own, no matter the circumstances.  We could use it in any blocks of time we wanted but that is the way it was.  Now, I am not saying that we didn’t actually need their help beyond that because some of us did and some didn’t. They were there for us but the certificate made the point that we were now on our own and we needed to make some hard choices and that those choices would serve us down the road.  No way were we to have visons of moving back in with mom and dad.    One of my brothers had to move in for a short time due to a fire that destroyed his home, but, it was pretty short term and he contributed to the household in many ways, I myself had a loan for a used car due to a accident and you better believe that the paperwork my parents had me sign was not unlike a bank agreement.

    The worst part about the dependancy is that the future for these kids returning to the nest is not good.  What are they going to do when the parents are no longer alive?  Or when the parents are in need of help themselves?

    • avatar Baby Snooks says:

      It isn’t a crime to let kids struggle. It is a crime to let them starve.  The world, and the economy, are totally different from when many parents “struggled” and the wise parents accept that and take the kids back in under their wings. Or under their roof.  Before the kids end up under a freeway underpass. Just as those in their 40s and 50s are competing with those in their 30s for the “professional” jobs so are those in their 20s and fresh out of college with a BA in hand. These days, the BA sometimes only guarantees an extra dollar or two over minimum wage.  Sometimes at the pizza parlor. And things are getting worse. Not better.
      According to the survey, 75% of the kids contribute back.  So taking the kids back under their roof is probably not such a bad thing.  And I bet the kids who move back home as “roommates” are less likely to just shove their parents into a nursing home simply because it’s convenient. Too much dependence is a bad thing. So is too much independence. 

      A friend took her son in at one point.  Jobless and hopeless.  He went back to get his MBA.  She paid for it.  He tutored on weekends to have cash.  He always took her out to dinner on Sundays with the cash. All he could do.  He landed a good job. Bought a homes and finally got married, and had two kids. And five years after he landed the good job, he paid off his mother’s mortgage. His way of thanking her for the “second childhood” as some would probably call it.  Maybe not all sons would do that. But many mothers would not give their sons the “second childhood.” Believing it was not good for them. The question of course being centered on them. Not good for the son or not good for the mother? 

      In many of these “typical” American families you comment on the kid may drive off the lot with a new car but it usually is a Toyota. The mother usually drives off the lot with a new Mercedes. Which leaves the father driving the “beater” as you call it.  Or using the bus to get to work. Dropped off at the bus stop by the mother as she heads for the shopping mall.

  3. avatar Maggie W says:

    When I graduated from the university, my parents paid for my apartment rent for the first four months.  My old car was paid for, but they also paid for my insurance.  This gave me some time to get a few paychecks under my belt.  In short time, I was able to go solo.   We have done the same for our sons.  If they ever need financial help for a good reason, ( medical help, etc), we would help.  I also know they would never ask for that help unless they had exhausted all other avenues.

  4. avatar David Bolton says:

    I posted under one of the “Margo” columns that I believe children should always pay their way in school. While I do step back from making such a blanket statement—especially since I had to borrow money from my own mother after graduation—I do think that kids should learn financial lessons as soon as possible, preferably as adolescents.

    There are some harsh and long-lasting lessons that life will deal you if you don’t watch out and make wise financial decisions at key moments—that degree in Medieval French Poetry will only get you so far in the working world.

    • avatar Paul Smith says:

      Curious that a capitalist society does not encourage, nay, make compulsory, financial education in our schools. Long lasting lessons should not mean descent into poverty.

  5. avatar J G says:

    I agree whole heartedly with the tips in this article.

    We helped our 21 year old by cosigning a car loan for her, but she is making the payments. She works full time at a preschool and is going to school at night to complete her degree, all by herself.

    I feel we are giving her the biggest gift of all. Independence.

  6. avatar ammaled says:

    Culturally speaking it is not an issue for this Hispanic to have more than one generation in a single household for whatever reason. We couldn’t afford to send any of our children to Uni but they all secured scholarships and other funding on their own. The family home is supposed to be a refuge (I hope, my son feels like he escaped) to it’s members in hard times. My son-in-law, an electrician was laid off three years ago and has been chasing jobs all over the country. My daughter Massage Therapist and CNA but could not get a position anywhere in Florida. Just life in the city.

  7. avatar fauwl says:

    As a recent college grad I am definitely in the 42% of “adults” who have received help from their parents.  I graduated school with a good job offer in hand (where I continue to work) and made what I thought was a savvy decision to have a roommate in order to save on expenses.  The roommate situation went from bad to worse and was negatively impacting all parts of my life. 

    My parents finally offered to loan me the cash to break the lease and put a deposit down on a new apartment and to provide some extra cash while I adjusted to paying the entire rent rather than spending it.  I am so grateful that they did this.  It has allowed me to concentrate more on my career and has also forced me to reassess my expenses.  What I am most thankful for though, is that we came up with a solid plan for me to pay them back. 

    Their help made a painful transition easier, and has put me on the path to becoming more independent in numerous ways.  I think that there are situations where it is beneficial to help someone out financially, and not just for the child, but to the family as a whole.  As pointed out in the article, the most important thing is coming up with a plan to correct the situation and prevent it from happening again.