Parenting Grown Children: What Dr. Spock Forgot to Tell Us

Money Matters: The Brits are just like us.

The Brits are not just our friends across the pond: They seem to be very much like us when it comes to giving their adult children a financial boost. A recent survey by the insurance company Liverpool Victoria had these findings:

94  percent of parents surveyed still make financial contributions to their children's education and major financial purchases, such as houses and cars.

55 percent assist with general costs of living, even more so during the credit crunch.

In the current economic climate [it's just as bad over there as it is here], the parents are the hardest hit and tend to bypass their own needs to help out the kids.

Eight out of 10 of those with grandchildren were helping to support both generations

Almost half of parents aged 70 or older said they were still helping their children financially.

Almost two-thirds of mums and dads said they helped their adult children because "they need the assistance", while 17 per cent said their child had asked them for financial support.

Money Matters: How much of a helping hand do we owe our children

A recent blog on Tellinitlikeitis, looks at the issue of what we owe our adult children. Grown children who demand help buying a house or regular babysitting or loans that are really gifts--that can feel like parental failure, and parents may be culpable for being enablers when this happens. Many of us get much joy from giving our children gifts--significant gifts such as help with a down payment on a house. But things can get out of hand.
For those in that position--their adult children are demanding, whether it's for goods or services--may be interested in this point in the blog:

"When children become adults, parents do not owe them a down payment on a house or money for the furniture. Parents do not have an obligation to baby-sit or to take their grandchildren into their home when the parents go on vacation. If parents want to do it, it is a favor, not an obligation. Parents do not “owe” their grown children financial help or an inheritance regardless of how much money a parent has. Parents must learn to cut the financial umbilical cord for their own sake and for the sake of their children."

Here are some books that address the point: Eileen Gallo and  John J. Gallo,: Silver Spoon Kids : How Successful Parents Raise Responsible Children; Gary W. Buffone: Choking on the Silver Spoon: Keeping Your Kids Healthy, Wealthy and Wise in a Land of Plenty.

Money Matters: Helping support a grown child

At last, a financial planner who isn't all bean-counter and estate-protector. There is, says Aaron Katsman, more to having an adult child move back home than rental agreements or fees for food. And more to providing them with a temporary stipend than a loan contract.

Keying in on the recent, economy-based phenomenon of older adult children--in their 30s and 40s--losing a job and either moving back home or needing significant financial assistance, he makes some points that struck a common-sense chord with me:

"Isn’t the point of having money, aside for trying to provide a comfortable lifestyle, to try and help out those less fortunate? Wouldn’t a struggling daughter fit that bill?"

"If parents are themselves stretched financially, they don’t have to actually shell out money for the child. Rather, they can provide a roof and help that way."

"Neither parents nor children view moving back home as a desirable outcome, but if left with no choice, would you actually refuse to support your child?"

You can read more on this blog, http://bizzywomen.com/

Re-Nesting: To have or have not a contract with your adult children

Parents of 20-somethings--especially recent college graduates--are experiencing a steady march of children returning to the nest. It's a hostile economy out there: difficult job market; horrendous credit crunch; rising prices for everything. And it's not just the 20-somethings, as the reports noted in earlier blog entries make clear. But all that raises the question of what sort of rules should parents set when the kids come back to the nest.
An interesting discussion of the issue is in a recent College Times story:

Written contract or no?  "Experts say there is no right answer because the dynamics of each family are different." That said, CT's experts say, it's important "to have a plan, preferably in writing, that spells out the new relationship. It can be as simple as a contribution toward household expenses, or it can be chapter and verse, but the reunited family needs rules."
One of the experts quoted is John  L. Graham, a business professor at University of California at Irvine who co-authored a book about the move-back phenomenon, "Together Again, A Creative Guide to Successful Multigenerational Living." It's not only about young adults returning to the nest but elderly parents moving in as well.

Money Matters: Setting limits when you make a loan

When you lend your grown kids money--and it's a loan, not a gift--you may be risking a whole new set of pressures on your relationship. "What seems straightforward can become a straitjacket if families aren't careful," a recent news story reports. It asks the key questions:  How do you keep family harmony when money is given to one child and not others? What happens if a son or daughter can't -- or won't -- repay the loan?

Some pointers::

1. Call it what it is--a loan or a gift? If you actually don't expect any payback, give the money unconditionally; otherwise it's not really a gift, but a debt in grandiose disguise.

A loan is much more work.

2. Discuss the need.

"If parents are going to be the bank, they should act like the bank," says a financial adviser. "You've got to treat it seriously; kids need to understand this is not petty cash."

3. Keep it simple

Draft a document stating how the loan will be structured. Get a promissory note in writing and set a repayment schedule. "You've got to set the tone. All the other family members are watching."

4. Don't play favorites

Not all children are the same, but parents generally prefer to keep things equal among their children. 

One solution is to reduce the borrower's share of a trust or inheritance by the amount of the loan, which counts as part of your assets.

Final words of advice from a financial adviser: "If you've got a challenging relationship with your kids, you for sure don't want to be their banker. If you have a good relationship with your kids, you want to be careful about being their banker. Nothing can make a good relationship go bad than money."