Sometimes our adult kids don’t use good judgement. We love them so we sometimes help them a little TOO much. Adulthood is a time for them to stand on their own two feet, but part of good parenting is to gently ease them out of the nest and allow them to take full responsibility for their financial lives.
I have three adult sons that I love like crazy. They are awesome kids, but like most adult kids, they stumble once in a while. Sometimes its just due to poor decisions, but more often, it’s just life smacking them in the face. Sometimes there is an unexpected bill, or a major car problem. Once in a while, they get fired or just laid off. Life isn’t always smooth, even for experienced adults. And for these young people just starting out, shit happens sometimes. Those are normal life events, but it’s all new to them, so they don’t always know how to react.
As a parent of adult kids, your instinct is to jump right into fix-it mode to just dive in and rescue them. After all, that’s what you’ve been doing for since they were little. But I’ve seen quite a few of my friends go down that road and it can end up in a very unproductive place. They let their adult kids “borrow” money, but don’t require them to pay it back. They struggle with having kids move back in with them – sometimes for years at a time.
See my post on living with your adult kids. I’m pretty lucky, or maybe I’ve actually done something RIGHT because none of my 3 sons has ever really asked to borrow money from me. At least not that I remember. I think a lot of the lessons I’ve taught them growing up gave them some good tools to work with. Check out my Dave Ramsey post on scaring kids away from excessive debt.
Step 1 – Talk to Your Adult Kids About Common Life Problems and Prepare for Them
I think this step needs to happen BEFORE the “bad thing” happens. In fact, I think it needs to be an on-going discussion, beginning in the early teen years. Adult kids today usually have a pretty easy time of it and I don’t think that they really have a good understanding that life can be HARD. Kids today often aren’t prepared for those bad times. Some kids turn to substance abuse or even suicide, because they have no resources to cope with those rainy days.
Share with them some of the difficulties of your own life and don’t sugar-coat things. People get sick or die, jobs are lost, car accidents happen, friendships and romances come and go. Sometimes bad things happen to good people through no fault of their own. Teach them to expect it and to prepare for it.
Saving for a rainy day is an alien concept among young adults. You can’t blame them really – many of them have never experienced an actual rainy day, and it comes as a nasty wake-up call when something inevitably happens. I talk to my kids constantly about their savings accounts and keeping their debt ratios as low as possible. And when they save money on a purchase by using a coupon or finding a nice item on clearance – they are PROUD to tell me and we celebrate that together! Cheer for your adult kids – encourage good behaviors!
Step 2 – Get the Facts and Analyze the Situation.
Our oldest son recently came to us with a money problem – a rare occurrence. His 14-year-old van had finally given up the ghost and he needed a new car. As a newly single Dad of four children (long story), his options were a pretty limited, but he needed a reliable vehicle to get to work and get the kids around.
Obviously, this isn’t the same situation as a kid who has partied too hard and wrecked their car. Or someone who had a car die from simple neglect or a repo. Those situations may require a consequence of having to take a bus or get rides with friends for a while. This was a case of someone who was trying their best to get by and just ran out of luck. I’m much more willing to help a kid who is just having a temporary rough patch than someone who has knowingly created a bad situation.
Step 3 – Discuss Options for THEM to Solve the Problem.
I think this is an important step that a lot of parents overlook. Important fact: You aren’t going to be there forever to bail them out. These are young adults, but they are ADULTS. Acknowledge that and insist they acknowledge it as well. This isn’t a teenager or a little kid who might need you to solve their problems for them. It could handicap them for life. So many people are just lost when their parents pass before they are prepared to manage their money adequately.
Their 20’s and 30’s are a time when they should be looking at trying to solve their own problems as best they can. Be realistic and don’t be distracted by any emotional displays from your little darlings. After all, temper tantrums and whining may have served them well during the teenage years. But now is a time to grow up and face the music.
And be prepared for them to not like some of the options. They may not enjoy working two jobs, riding the bus for a couple of months, or driving a crappy car, or living in a dump with several roommates. But they certainly are legitimate solutions that many young people have to endure and sometimes these really dismal situations light a fire for them to find a better solution.
With our son, we spent a couple of weeks talking about credit scores, loan options, ideas for generating additional income, and figuring out what he could reasonably afford for a replacement vehicle. (Fortunately, he had a kind friend who lent him a car for a few weeks until we could get there to help him car shop.) We also talked about the possibility that we might need to co-sign a loan with him, and why we might not feel comfortable with that. It’s a great time for a respectful and frank money discussion between adults. And that’s exactly what we had.
Step 4 – Decide IF you Want to Help and HOW You Should Help
Help for adult kids does not always entail whipping out your checkbook to make the problem go away. In fact, that usually is NOT a good move at all. Sidebar: My parents didn’t really do that and I think it was great for me. I had a job, was paying rent, and had my own checking account and credit cards by the age of about 16. Today’s kids think credit cards are just a source of free money!
Sometimes the help can just be talking through the options with them and helping them to make a good decision. You can send them off to gather more info and explore all their options. They know perfectly well how to Google stuff, right? Sometimes, you just have to have the hard conversation with them. As in “we love you, but you got yourself into this mess, now you need to figure a way out”.
We will still love you, advise you and cheer on every bit of your progress. But we aren’t going to support your poor behavior like over-partying, crazy shopping behavior, sleeping until noon, hopping from job to job, or using Mom and Dad as an interest-free, no-payback “loan” factory – ugh! I’m not a fan of the “permanent student” option either. We set some pretty firm limits on the education fund. College doesn’t have to be a free ride and it probably shouldn’t be! Check out my post on paying cash for college.
If you do choose to offer help, it is perfectly alright (and desirable!) to set strict conditions. Examples: you may live with me for the next two months, BUT you have to show me where you are saving for your first month’s rent AND you have to help with chores or buy some of the groceries. That’s just the reality of helping adult children when your grown child makes bad financial decisions. It has to be a little bit painful, or they will just go back and do it again!
OR I will lend you half the money for your new car, but it has to be paid back in regular monthly payments by the end of the the year. AND you are going to have to get a better job to pay for your half of the car. And then you need to enforce it. Kids will live up (or down) to your expectations, so set high ones and don’t let them slide out of it.
I offer debt free coaching in my program – No BS Financial Freedom Framework. It’s very helpful for people of any age who are struggling with excessive debt.
The Result of the Car Story
In our case, we agreed with our son that we would co-sign a loan for him IF he set it up on automatic payments. Then he wouldn’t be tempted to skip any payments or pay late. We would also go with him to the car dealer to help select an appropriate car. I just happen to be a crack negotiator, so I would teach him how to spot a good bargain and also negotiate the deal (see my post on how to get a good deal on a car) with the car dealer.
Happily, we found a very nice car on our first try. It was in great mechanical shape and well within his budget. He was even able to qualify for it without our help. It was even half the down payment he had been prepared to make. So it was a very happy ending all around.
Moral of the Story – You are NEVER going to be completely done with raising your kids. Even in their 40’s and beyond, they are still going to need your advice and support. But you don’t want to fall into that trap of enablement, especially if you are going to endanger your own financial well-being. They offer car loans, home loans, and student loans, but they have yet to come up with a retirement loan!