How to Respond When Millenial Children Ask for Money

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.  It is important to clarify expectations when helping adult children financially. 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.

Parents have to be cautious and prevent taking on their children’s problems and making them their own.  Here are some questions to consider before loaning money to adult children:

1. Decide if it will be a loan or a gift?
2. Will you charge interest?
3. What are the consequences if they don't pay the money back?
4. Will the loan you give put your relative in a financial bid?
5. Is the loan for a legitimate reason?

The YOLO Generation: How Their Financial Priorities Differ

1. Taught to use credit cards as their primary means of payment.
2. Don’t think about the future and only live day to day.
3. Assume their parents will take care of their financially.
4. Assume they have plenty of time to save for retirement, buy a home, etc.
5. Lack basic money management skills.
6. Reluctant to take advice from others – assume they know everything.
7. Feel credit cards are the best way to track their spending.
8. Make purchases on credit and make plans to pay them off in a few years instead of a few months. Don’t realize buying with debit cards is a better way to track spending.
9. Believe they will have an inheritance so don’t worry about saving for retirement.
10. Use extra money for fun instead of saving – don’t understand the importance of saving.
11. Don't understand the costs associated with having a credit card and have too many credit cards.
12. Impulse shoppers - buy what they want when they want it, don’t negotiate, not consumer savvy.
13. Consider the environment when making purchases.

Here are some tips to use when children ask for money:

1.  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.
2. See where you are. Determine if you can afford to help financially, if not, provide your children with other alternatives.
3. Save.  Continue to save money while you are helping your children.
4. Don’t dip.  Don’t dip into your retirement or take out a loan to help children. 
5. Debt.  Don’t go further into debt helping your children. Don’t co-sign for a loan or open joint credit card accounts.
6. Advice.  Give advice on how to manage finances and deal with problems. Be as supportive as possible and try to see your children’s point of view.
7. Provide resources.  Provide resources such as social organizations that can help financially.
8. Set a limit.  Set a limit on how much you will help and stick to it.
9. Draw up a loan agreement.  Sign a contract that includes a formal letter stating the terms of the loan and when the loan must be paid back.
10. Don't be a sucker. Don't fall for the tears, sobs and emotional pleas for help from adult children who do not manage their money wisely. Don't let adult children bully you into giving them money.
11. Don’t give money. Don’t give money directly. If your children need money to pay bills ask for the address and send the money directly to the company.  If your adult children need spending money they should find ways to generate income.