Is Your Adult Child Seeking Financial Aid? Follow These 5 Money Expert Tips

A big part of parenting is making sure your children have everything they need that love alone can’t provide. This usually means: spend money. The cost of parenting in the US is very high. Parents can expect to spend between $16,227 and $18,262 per year raising a single child born in 2023.

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If your child is still under 18, “At least when he turns 18, parental expenses will end!” You may be thinking. Of course, this is not as likely as you think. Almost half (47%) of parents with children over 18 provide financial support to them, according to a survey Savings.com report.

For lower- and middle-class families, and possibly even some wealthy families, footing the bill for your “adult child” (quite an oxymoron) is a cumbersome and even dangerous expense—especially if financial support is needed once they enter school. pensionwhere your income may be limited.

What do you do if your adult child asks for financial aid? GOBankingRates spoke to money experts to get their top five tips for dealing with this situation; Because when an adult child comes to you for financial help, it’s a a sensitive and often emotionally charged situation.

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Ask Yourself How Helping Them Could Hurt You

The desire to help their children, regardless of their age, is inevitable for most parents. But remember that most of this is instinctual and not logical. This doesn’t mean you should immediately decline when your adult child asks for financial help; Rather, it means you need to curb the urge to save the day and consider what helping them with money means for you and your money.

“Many parents struggle to balance the need to help their children with the need to set their own priorities. pension and financial health,” said Cliff Ambrose, founder and asset manager of FRC Peak Wealth.

“Financial advisors recommend asking yourself how helping your child now could impact your future; especially if it means running out of money. pension saving money or putting your own financial goals on hold.

A detailed examination of your financial situation makes it clear that saving your child is a difficult task. bad or risky move for you, then you need to prioritize yourself and turn them down.

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Get to the Root Cause of the Problem

Before we go too far, let’s discuss how you should approach your adult child’s request for financial aid. Communication is important here; So is getting to the root cause of their financial distress.

“Experts emphasize the importance of evaluating the reason behind the request,” Ambrose said. “Is your child experiencing hardship due to a temporary setback, such as a job loss or medical emergency, or is the demand part of an ongoing pattern of financial instability?”

If you can find the root cause of your child’s debts or lack of income, you can figure out whether it’s even right to consider helping them.

“Understanding the root cause will help you determine whether the request is a one-time need or indicative of a larger problem that may require a different solution. budgeting or career planningsaid Ambrose.

Consider Whether You’ve Enabled Them

Let’s say your child reaches out to you for money after he was just laid off from work and his live-in partner left him, and now he needs a new place to live and he broke his leg, resulting in an incident. big medical bill (or something disastrous like that). Alternatively, let’s say your child asks for money because she can’t make her monthly credit card payment after a holiday shopping spree and is really hoping to go on a spring break trip with her best friends.

These wildly different genres scenarios. One indicates a one-time case of bad luck. Second, it points to immature and irresponsible behavior that could lead to you signing up for years of bailouts if you don’t relent on financing. This will not only hurt you financially, but will also prevent your child from becoming a real adult.

“It’s natural to want to support your children, but you need to be careful not to create a cycle of constant financial aid that can lead to addiction,” said wealth manager Said Israilov. Israilov Finance. “Regular rescue plans can prevent your adult child from developing money management skills and developing financial independence. This can lead to financial enmeshment; The boundaries around money are blurring, obligation, guilt or right “This can strain your relationship and harm both your financial future.”

If You Decide to Help Them, Make Boundaries Open

If helping your adult child financially is safe, responsible, and comfortable, you need to set clear boundaries with him before giving him money.

“For example, you might explain that although you are willing to help, you have a set budget and cannot meet it. more than a certain amount without affecting yourself pension savings or other obligations,” Ambrose said. “This sets expectations and prevents future misunderstandings.”

Put Your Financial Aid Agreements in Writing

Money experts insist that if you’re giving your adult child any financial assistance, you should clearly state the terms of the loan (or gift). And you will do this in writing, just like any other formal agreement.

“Whether it’s a loan or a gift, putting everything in writing, including repayment plans or unconditional terms, helps avoid potential tensions later,” Ambrose said. “Many financial experts also recommend using this opportunity to teach your child important lessons about money. If the request involves a large sum or ongoing support, it’s a good idea to have a frank conversation about budgeting, debt management, and the long-term impact of borrowing or living beyond one’s means.

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