Saturday, December 10, 2011

Should You Help Adult Children Financially

According to NEFE: 50% of parents are providing housing, 48% are helping with living expenses, 29% of giving money and 28% are helping with medical bills. Moving back home is the only affordable option for many adults. Some adult children are moving back home due to unemployment, debt or divorce.

It is important to clarify expectations when helping adult children financially. Parents should make it clear to their children what they expect and set a time frame to move out or stop financial dependence. Some parents don’t want to see their children suffer but in some cases parents are hindering instead of helping their children. This is especially true if children mismanage their money or make bad life decisions.

Show and give adult children effective tools to improve their financial situation. Parents have to be cautious and prevent taking on their children’s problems and making them their own. Parents also have to take care of themselves first before they can help their children. Here are 14 ways for parents to financially support adult children.

1. See where you are. Determine if you can afford to help financially, if not, provide your children with other alternatives.
2. Charge rent. If you are not a position to incur the extra costs charge rent enough to cover groceries and increased utility usage to prevent going into debt and getting behind on your bills.
3. Pay yourself first. Pay your bills first to keep a roof over your head. If you have any additional money left over you can use a portion of that to help your children.
4. Set rules. Set ground rules for how your household is run and discuss them.
5. Save. Continue to save money while you are helping your children.
6. Don’t dip. Don’t dip into your retirement or take out a loan to help children. Don’t co-sign for a loan or open joint credit card accounts.
7. Debt. Don’t go further into debt helping your children.
8. Give advice. Give advice on how to manage finances and deal with problems.
9. Be supportive. Be as supportive as possible and try to see your children’s point of view.
10. Provide resources. Provide resources such as social organizations that can help.
11. Set a limit. Set a limit on how much you will help and stick to it.
12. Loaning. If you loan money to your children, don’t expect to get it back. If you want to get the money back write a formal letter stating the terms of the loan and when the loan must be paid back.
13. Move out. Set a date when your children have to move out and don’t change it.
14. Don’t give money. Don’t give money directly. If your children need money to pay bills send the money directly to the company. If your children need spending they should find ways to generate income.

1 comment:

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