Just Say NO: 5 Reasons Why NOT to Help Your Kids out of a Financial Bind
The prospect of a young person in their mid-20s or early 30s relying on a parent for financial support, or living with their parents, is no longer an oddity. Not in the shadow of the global economic crisis of 2007-2008 when record unemployment forced tens of millions of young adults to “boomerang” back home after failing to launch their careers in a tough job market. By 2015, a third of millennials were living with parents
However, not all young adults in financial distress are victims of an economic downturn. In many cases, the kids may be fully grown up but not necessarily financially grown up. As a parent, you will have to make a lot of decisions on whether to financially bail out your adult kid or to show them some “tough love” and force them to take responsibility for their finances. Here are some of the top reasons to not open your wallet when your kid finds themselves in the financial doldrums:
Too Much Help Creates Co-dependence
If you are constantly doling out cash whenever your kid is in a bind, the situation will create a cycle of codependency which your child may have trouble extricating themselves from. Kids may even feel guilty for having to constantly ask for money from daddy or mommy but as long as there is that soft landing pad, that “iron rice bowl” guaranteed by parents, they will always take the easy path instead of working out creative solutions for their financial circumstances.
They are Becoming Lazy
While some kids feel shame or guilt from having to fall back on parents for money, others will shamelessly exploit the relationship and even display a sense of entitlement to their parent’s money. They will not get on their feet and look for a job, or work long hours, because they can always rely on daddy or mommy to chip in. If you sense the situation with your child is heading that route, it is time to close the purse strings and only open them if there are extenuating circumstances such as an accident or incapacitating illness.
You Can’t Afford It
If you are struggling to make ends meet and still have to finance a strong and healthy son or daughter, it is time to close the taps. If you are willing to work at your age, there is no reason they shouldn’t look for a job or live within their means at such a young age.
They are Living It Up
If you have to cough up extra cash every month and your kid is living a luxurious lifestyle on your extra money, then you may need to cut off or limit the help so that they can learn to make financial sacrifices and live within their means. If they have a job and are in a financial crisis, they should be able to give something up in order to cut down on their living costs.
They Don’t Pay Back
Unless you are the heir to millions, you should be loaning adult children money which they must pay back within an agreed upon period of time instead of dishing out free checks. That is part of teaching them the value of taking greater responsibility for their finances.
Whenever you loan them money, put a payment schedule in place which must be adhered to. If they are unable to meet it, they should be able to re-negotiate a more affordable payment term. If they miss payments, establish consequences and penalties to be paid. This will help you both to put a professional relationship with money in place, and your son or daughter will begin respecting your money instead of treating it as their entitlement.
You should always help your child when they are in distress. However, if they are getting too dependent, you can gradually guide them towards financial stability by showing them a little “tough love”.
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