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Just because your children are now adults doesn’t mean that they won’t necessarily need financial help. While it is important to encourage your adult children to be financially independent, you also want to be able to help your child if they are facing financial difficulties as a result of medical issues, job loss, divorce or other unexpected hardships. Here’s how you can give that help without jeopardizing your own financial security.
Above all, you need to be certain that you set boundaries with your children. While it can be important to provide a safety net, it can actually be to your child’s detriment if you swoop in to help every time they have a financial issue. This might include insisting that your child get a job outside of their field, even if it is retail or restaurant work, to keep some money coming in. Setting boundaries also communicates to your children that you expect them to be financially independent outside of the particular emergency you are helping them with. Some of the other suggestions below may also help you in this boundary-setting.
Protect Your Retirement
You shouldn’t dig into your own savings to help your children, so instead, look at ways to cut your own expenses. You might be able to refinance some existing debts. If you took out a PARENT Plus loan to help pay for your child’s education, look into refinancing options. Working with a private lender, you might be able to lower interest rates with a new, reduced monthly payment. You might also want to consider whether you can cut back on any other expenses, such as your grocery or entertainment bill.
Consider a Loan
Instead of simply giving your child money, you may want to consider making it a loan. If you do this, create a written contract that includes a payment schedule. If it makes you feel more comfortable, you can start by having your child only pay you a small amount each month. You also have the option of forgiving the loan in the future.
Open Your Home
Consider opening your home to your child instead of your checkbook. Having your adult child live at home with you may not be the most comfortable solution for either of you, but it might be the most economical. Depending on your child, it might also provide extra motivation for them to get back on their feet. However, make sure that you don’t fall back into your old roles. Your child should contribute as an equal member of the household, doing chores and paying at least a small amount if possible, toward rent and other costs.
Help with Budgeting
If your child is financially irresponsible or just hasn’t absorbed the money lessons you tried to teach, you might want to consider working with them on a budget. This can be tricky as the adult parent because you don’t want to be condescending, but it can also be empowering for your child to get a better handle on how to manage their money, including how to put money away for retirement and other savings.