Should I Offer Financial Support to my Adult Child?

Q: My adult child is going through some financial difficulties. I’d love to help them out of this tight spot, but I’m wondering if this is a wise choice. Should I offer financial support to my adult child?

A: In recent years, newly minted adults have become more dependent on their parents. According to a report by Merrill, more than three-quarters of parents in the U.S. provide financial support to their adult children. This includes allowing their kids to live at home, covering student loan bills, paying for their phone/data plans and more. This development is likely due to high amounts of student loan debt, low starting salaries and the increasing cost of housing. All of these factors, and more, make finances especially challenging for many young adults. Of course, parents will naturally want what’s best for their children, so they are often quick to offer financial assistance. However, as you mention, all this begs the question: Is offering financial assistance to adult children really in their best interest? There’s no one-size-fits-all answer to this loaded question. In fact, the answer will depend on several factors, as well as your relationship with your child.

Before saying yes to a request for financial support from an adult child, ask yourself these questions:

Is my own financial situation stable right now?
Before offering substantial support to another person, even if that person is your child, you need to make sure your own needs are being met and that your future is secure. Are you finishing the month with money to spare, or barely making it to the next payday? Are you financially prepared for retirement? Do you have any outstanding debt? If you are comfortable enough to offer support without feeling pinched, dipping into savings or scrimping on the money you’d dedicate toward your own future security, you can afford to offer this assistance. However, if you stand to lose your own financial wellness by covering your child’s bills or student loan payments, you won’t be doing anyone a favor by offering to support your child.

Is my child’s situation by default temporary?
Life is dynamic, which means your child’s need for assistance today can change tomorrow by way of a fantastic job offer or another great opportunity. Or can it? At times, your adult kid might find themselves in a tight spot that is inherently temporary. For example, they may be completing a necessary, but unpaid, internship. Or, they may have gone back to school for additional training so they can increase their earning potential. Perhaps they’re currently undergoing medical treatment and have high medical bills to pay. Under these circumstances, you may want to consider offering a bit of support until the temporary tight spot is over. If, however, your child is asking for financial support because they are living a lifestyle that is beyond their means, you may want to think twice before acquiescing to their request.

Will offering financial support hinder my child’s financial independence?
One of the biggest drawbacks of offering monetary assistance to a grown child is the possibility that your child will come to depend on that money. If your child has not yet learned to manage their finances responsibly and continues to make poor money choices, offering financial assistance is likely not in their best interest. You won’t be around forever, and it’s best to let your child learn how to spend within their budget, save for the future and in general, to live responsibly.

How will my financial support affect my relationship with this child?
Giving breeds positive feelings, and many people believe that offering monetary support to their child will improve their relationship with him or her. However, it’s important to note that this is not always the case. First, the child may come to equate the relationship with the exchange of funds. Also, when you decide to stop offering support, this can create a point of tension between you and your child. Finally, if you can afford to give, but you know this giving will be accompanied by resentment on your part, it’s not fair to yourself, or to your child, to provide financial support.

How will I structure my financial support?
If you decide to go ahead and offer financial support to your child, it’s important to set clear guidelines for how you will be providing this assistance. Will you offer a set monthly amount, or adopt a give-as-needed approach? Will you expect your child to pay you back, even partially, when their financial situation improves? Finally, is there a date you plan to stop offering assistance or to reevaluate whether your child still needs this support? Setting clear parameters before offering support can help you avoid hurt feelings and uncomfortable situations down the line.

Offering financial support to an adult child can be a lifeline–or it can be a way to enable detrimental habits. Be sure to ask yourself the questions listed above and to make an informed decision before offering monetary assistance to a grown child.

About Freedom Federal Credit Union
Freedom serves and is open to anyone who lives, works, worships, attends school, volunteers, or has family in Harford or Baltimore County, MD. As a credit union, we are committed to putting you first, not shareholders, and helping you achieve your financial goals. Learn more at freedomfcu.org or call 800-440-4120 to see how we can help.

Your Turn: Do you (or would you) offer financial support to your adult child(ren)? Tell us about it on Facebook, LinkedIn, Twitter, or Instagram @FreedomFedCU. #parentingadultchildren

How Do We Thrive?

You may wonder why we are so committed to our philanthropic endeavors. Why we focus on outreach and the good we can do for our members and in the community. Why our strategic focus is about experience and doing what’s right. Why our goals are set to generate the financial stability and income necessary to support our philosophy of people helping people. Well, I was recently watching a program on Netflix called, David Attenborough: A Life on Our Planet. In it was a quote I found quite poignant and an applicable answer to those very questions.

“A species can only thrive when everything else around it thrives too. We can solve the problems we now face by embracing this reality. If we take care of nature, nature will take care of us. It’s now time for our species to stop simply growing, to establish a life on our planet in balance with nature. To start to thrive.” – Sir David Attenborough

Change a few words and…

We can only thrive when everyone else around us thrives too. We can solve the problems we now face by embracing this reality. If we take care of others, others will take care of us. It’s now time for us to stop simply growing, to be something bigger not just something big, to establish a balance with our community and start to thrive.

What Seems Unimportant

I made the most important mistake at the most unimportant time. That was the phrase I uttered in a dream a few weeks ago. I was apologizing for something and said, “I’m sorry I made the most important mistake at the most unimportant time.” It’s a phrase I have not been able to shake. I kept thinking about it over and over trying to gain some insight as to what it might mean. I think I figured it out.

There are no unimportant times and there are no unimportant actions. Everything we say and do matters, on some level, in every moment. Even if it seems a trivial or mundane act, even the simplest thing, can have a major impact. What I think my subconscious mind was trying to tell me is that you can’t take anything for granted; a smile at a passerby, the door you don’t hold, the stranger you help, the person you judge, you never know what that will mean or do to someone else. We all have a responsibility to think about the messages we send, the values we convey and the world we help influence because too many today place personal desire or want above the greater good.

I know nobody’s perfect. We just need to remember that actions/words have consequences and, even when you think something is unimportant, it could be the most important mistake you make.

Benjamin Franklin offered a poetic perspective:

For want of a nail the shoe was lost,
For want of a shoe the horse was lost,
For want of a horse the rider was lost,
For want of a rider the battle was lost,
For want of a battle the kingdom was lost,
And all for the want of a horseshoe nail.