October 03, 2019
Oh, the things we do for love! A recent survey reports that more than half of U.S. investors provide financial assistance, or personal care to adult children or other family members. The financial aid to adult children is above and beyond any assistance with college costs.
And we’re not talking pocket change. Among the 45% of people surveyed who said they provide financial assistance to a family member, they estimated their annual help reaches $10,000.
Yet at the same time so many of you tell me you aren’t saving enough for retirement, or you have credit card debt, or you can’t possibly afford the annual premium for a long-term care insurance policy that will protect you –and your family – in your later years.
If you are providing any financial assistance to an adult child, or other family member and you are worried about your own financial security, it is time for a serious Needs v. Wants review of what you are doing. Scaling back your family financial assistance can give you the cash today to work on what should be your main priority: retirement security.
Helping a family member who is truly in need is one thing. Especially elderly parents who are struggling to meet their basic needs. But I don’t think that’s what is always happening here, especially with adult children.
Unlike elderly parents, your grown kids are capable of supporting themselves. Yet so many of you continue to pay for way too much. You let them continue to use the debit card linked to your checking account; have you added up all the charges for non-essentials that come out of your account? Or you agree to help cover a car loan, but you didn’t insist that your child shop for the least expensive reliable used car. You’re subsidizing a $500 car payment for a too-nice new car, rather than helping cover a $300 payment for a 3-year old used car that comes with a manufacturer’s warranty. Or you told your kid to go ahead and rent the 1-bedroom and you would help out, rather than let them figure it out on their own: rent a studio or live with roommates.
If any of that sounds remotely familiar you are stuck in the dangerous habit of saying yes out of fear. You fear disappointing your child. You fear that somehow saying no is a failure on your part.
You are so very, very wrong my friend. Here’s what you –and your family should fear: that you do not land in retirement in solid financial shape. If continuing to provide financial assistance to your kids is making it hard for you to get your finances in great shape – saving more for retirement, paying down your mortgage, eliminating credit card debt – you are actually making matters worse for your family. Years from now, your adult kids will likely need to step in and help you. At a time when they are trying to raise their own family. If you help today it can’t be at the cost of hurting you tomorrow.
Please hear me out. When it comes to helping adult children, I want you to stand in your truth. Saying no out of love, rather than yes out of fear will not just help you. It can also be the catalyst that helps your adult child take responsibility for his or her future.