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

Money Matters: What happens when you can no longer help your kids?

A friend tells me this story: His friends--a couple who retired last year--have a son living in Florida. He was in the construction business but Florida's economy--and particularly the home building business--is in the tank right now. Long story short: The son lost his job. The parents, who had done well during their working years--have been paying his mortgage so he won't lose his home. But their 401k took quite a hit in the Great Recession. Their investment income is down. And now they are talking to their son about how he might have to let his house go.

It's a painful conversation to have. Many of us who built up comfortable nest eggs during our working years are feeling pressed to have the kind of retirement we thought we'd have. But this takes that worry up a notch: What happens when our children run into trouble? Many of us have always assumed--not necessarily articulated but it was there in the back of our minds--that we'd be able to help our kids through tough times. But now the tough times are prolonged and the foreclosure problem deep. For many of us and for many of our kids, there's no relief in sight yet. At what point do we say, 'Sorry. We can't help anymore.' And not be crushed by it.

Your Money and Your Kids: Are they counting on a legacy?

At dinner with friends, paterfamilias mentions that his children--that's our grown children and their spouses--have told us, 'Spend your money; travel and enjoy yourselves; don't save it for us.'  In a way, he's bragging just a little bit. He's saying, in effect, his kids are doing well and don't need our help.

Our friends--she's a "new" friend, having just moved in with him, who's an "old" friend--laughs and says that's not what her children are saying. They're telling her: "Save some money for us. Our father [her former husband] is spending it all on his new wife."

We all chuckle over that. But neither of these dialogs deals with the real world--at least the real world I'm experiencing. Yes, I'm going to enjoy some of the money we've earned over the years, but yes, I'm also going to save something to leave for my children and grandchildren. Or, if I don't leave it, it will because they've already gotten it: either I've lent it or spent it--to or on them.  But even with that lend-or-spend attitude, I hope there's a small legacy for them [if old-age medical needs don't get in the way; how enjoyable a spend would that be?]--something to help the Grands through college or for my children to do something they've always wanted to do or just something to haveif there's an unanticipated need.

And I think that's what our friend's children are, in effect, saying. "We want to know a safety net will be there if we need help with some major expenses." Ours aren't articulating it because they still have the safety and stability of our Being Together as the same old us. We're not jetting off to a second youth or off on some other kind of spree. They can afford to say they don't care about a legacy, but it's not because they may not need it. That's a pretty comforting feeling for us--and maybe what paterfamilias was getting at by raising the subject at dinner with friends.

Lending Money: What to do when your adult child needs financial help

 These are hard times. The Great Recession is taking its toll--not only on our 401ks but, for some of us, on our jobs and worse, our children's jobs and financial well-being. Just to put things in perspective, a recent survey by Fidelity Investments found that 41 percent of U.S. households did not have emergency funds sufficient to cover three to six months of living expenses. What to do if your child runs into trouble and needs some money to tide him or her over? Here are some pointers from financial and other experts:

First point: Can you afford to make a loan? Here's the measure Ira Bryck, director of the University of Massachusetts Family Business Center, uses: "It's the same rule as gambling: Don't loan what you can't afford to lose."

Point two: What's the loan for? 'lf your finances are at the edge, what they'll use it for can make a difference. If the loan is to launch a new business or buy a house, maybe it can be delayed; if it's to keep the foreclosure wolf from the door, maybe you'll want to stretch your own finances. The answer to point two can temper the answer to point one.

Point three: Sibling rivalry runs deep and can crop up when you least expect it. Will you be accused of playing favorites? Will the sibling in need by charged by brothers or sisters of draining their inheritance. It's your money to do with as you please but it might be a good idea to keep any assistance just between you and the kid in need--unless everyone's getting tapped for aid.

Point four: Do the math. Let's say your investments are earning 7 percent a year( don't' we wish!). If you're asked to loan $20,000 for five years, the real cost to you for sidelining that amount of money is $28,000. This is not to say you shouldn't lend the money--it may be a good investment if it lets your child finish school or buy a house, but it should be factored into the "what's the money for" calculus. Point five: Your needs count. If the loan tips you into financial instability, you may have to say no. There may be other ways to help.

Money Matters: How we view the recession's impact depends on how old we are

As readers of this blog may know, I've got quite a collection here of studies done in Great Britain, Australia and other countries on how "the bank of mum and dad"  is faring in this economic downturn. Short answer: not well. To complement those reports, here's one from Pew on how our perspectives of the downturn and our financial well being are tempered or magnified by the age group we find ourselves in. Our grown kids, it turns out, are the most hopeful--time is on their side. But here's some of what Pew [Pew Research Center's Social & Demographic Trends] found about the rest of us.

Adults 65 and older--most of whom have already retired and downsized their lifestyles--have escaped the downturn's full fury. Adults in late middle age (50 to 64) have seen their nest eggs shrink the most and their anxieties about retirement swell the most. Younger adults (ages 18-49) have taken the worst lumps in the job market but remain relatively upbeat about their financial future.

Some details of interest:

Older adults are less likely to say the recession has been a source of stress in their family. Despite the recession, three-quarters say they expect to be able to leave an inheritance for their children--even though more than half of all older adults say the recession has reduced the amount of money or property they expect to bequeath.

Two-thirds of adults ages 50-64 say they lost money in the past year in mutual funds, individual stocks or 401(k)-type retirement accounts. Of those who report such losses, two-in-ten say they lost more than 40% of their investments' value and nearly four-in-ten say they lost 20% to 40%. By comparison, far fewer older adults or younger adults report losing money in stocks and retirement accounts in the past year.

Money Matters: An Aussie take on what we can afford to give our adult kids

The economic retrenchment is, as we know, global. We aren't the only families having to pull back financially, and that includes support for our grown children--be it paying off a college debt or helping with the down payment on a house. A report out of Australia mirrors what many here are experiencing.
Evidently, the hard times down under are silencing the peal of wedding bells. Here are some highlights from a report by the St George Bank:

Generation Y expects parents to help pay for weddings, house deposits and education fees, but concerns over retirement and debt have taken priority for most mums and dads.

70 per cent of baby boomers believe the global financial crisis has seen their assets shrink in value, and 71 per cent are now concerned about their financial health. As a result, only 6 per cent of parents rate providing financial assistance to their adult offspring as a top priority.

Almost half of those parents with adult children said they were focused on saving, either for retirement (25 per cent) or other future expenses (24 per cent).

Another 41 per cent favored paying off debt, either their credit card (24 per cent) or mortgage (17 per cent), the survey showed.

Bottom line: “Circumstances have changed for many and it’s understandable that parents are now having to focus on their own needs and financial health,"a general manager of the bank said. “As a result, when it comes to paying for things like weddings, first home deposits, overseas travel and childcare, many Gen Ys must now stand on their own two feet.”

Money Matters: What if the kids are over their heads in debt?

It's one thing to struggle with your own fiscal problems--retirement looming, nest egg shrinking. But it's even worse to watch your kids fall into debt. What do you do about that?
That's a question raised in a recent Washington Post column, which advises parents of grown children NOT to denude their own assets in an effort to save their children. Certainly, putting ourselves in a position where we are no longer self-supporting is dangerous. But sharing some of our assets with a child who runs into fiscal trouble can be the right thing to do--depending on the situation. As I see it, the help line can be drawn between a child's bad judgment and misjudgment.
Here' are highlights from the column: 

Don't jeopardize your own finances in order to help your child, particularly if you’re nearing retirement age and have a fixed number of years to build up/resuscitate your savings plan. Borrowing from your 401(k) (if there’s anything left in there) or tapping a home equity line of credit to help pay off your kid’s debt isn’t a great idea.

Don't be afraid to pass judgment on your child’s debt. You’ve weighed in on everything from the cleanliness of their rooms to their Friday night date, so why should debt be any different? You may decide to treat student loans or health-care costs as worthy causes while credit card debt from that new flat panel TV is not. The last thing you want to do is enable them to continue what could be a vicious cycle of spending.

Treat a loan to your adult children as a full-fledged loan, complete with interest. (If that makes you feel guilty, you could always return the interest to them after the final payment as a surprise.) As with any loan, write down the terms of repayment and decide what the penalties should be for late or missed payments.

Money Matters: Hard Hit and Hating It

Many of us who have grown children have been hit hard financially by the economic crisis. Money we thought we'd have to live comfortably on and still help out our adult children is gone. Is that changing our relationship with our adult children? Some of us may be worried about becoming dependent on them, or that they'll be dependent on us and we won't have the wherewithal to help.Or we jsut feel so bad about what's happening that we take it out on the grown kids, as one financial adviser noted recently.

Friends who used their second homes as vacation retreats for their children are having to sell those homes. May not sound like the worst crisis in the world, but it means the loss of a family gathering place and a familiar setting--one that may date back to their children's childhood--for their grandchildren to spend idle weeks of summer.

Friends who had planned to help their children buy a home are finding they don't have the cash to help out with the down payment. Or to pay off college loads. Again, it may not sound like a terrible crisis, but the loss of power--of still being the Big Daddy or Momma--are palpable. So many of us want to make life easier for our children, and this fiscal crisis is playing havoc with that plan. Maybe this is healthy--maybe some of us coddled our children. But a lot of us didn't. We just took great enjoyment from using the money we'd earned and saved over a lifetime to make our children's lives easier. And for many of us, that ability is gone.

How are you coping with fiscal losses? Is it affecting your relationship with your grown children? Or your own feelings about yourself vis a vis those children?

Money Matters: Helping the kids till it hurts

For many of us, gone are the days when we could open our wallets with ease and help our grown children when they were in need--paying off a college loan, helping with the down payment on a house or even defraying everyday living expenses. Now our 401ks are half of what they were, the value of our homes has shrunk. Our personal sense of wealth is melting away. And yet the kids still have needs--needs we want to fill. Not just to ease their way but because right now it may be tougher for them at the beginning of their careers than it is for us at the tail end of ours.

It appears to be the same rough go for the Brits. A recent study by Scottish Widows (must find the origins of that name!) found that adult children were sapping their parents and grandparents of large amounts of money, forcing them to cut back on daily spending and to take on more debt.

The research showed that one in six of those parents who have given money to their children have increased their own levels of debt, while one in ten have had to put a stop to any kind of savings of their own in order to fund their children. Moreover, nearly a quarter of adult children or grandchildren are using or have used parental handouts to fund their day-to-day living expenses or spending money. Over a third needed the money to pay off debt, and 30 per cent needed the cash for a house purchase.

Here's one other point from the research: Of the 6,000 adults surveyed, almost half of those that have already given money to their children expect to dig deeper and give them more in future.

Money Matters: When the kids face foreclosure

To lend or not to lend when your grown children face losing their home. Not an easy call--especially if your own fiscal well being is greatly diminished. Here's some general advice on the subject from a Washington Post columnist Michelle Singletary. Singletary is answering a question posed by a sister about saving her brother's house when the brother is an undisciplined spender:

"If you ask someone to use a cash gift in a certain way, such as for college tuition or catching up on a mortgage, the recipient should honor your request to the best of their ability. However, once you extend a gift, the money or item is no longer yours to control. You have to leave it to the person's conscience to do the right thing.

"Before giving someone thousands of dollars to save a home, you should ask to see a written budget and the underlying documentation, such as pay stubs, bills, etc. Yes, this is an intrusive demand. Yes, the person or couple might balk, refuse or even cuss you out.

"But if people are asking for a significant amount of money, they need to prove to you that your money won't be wasted. They need to prove their financial situation has improved. Or they need to demonstrate they are becoming better money managers. Otherwise if you bail them out, and a few months later they are behind again on their mortgage and the lender forecloses anyway, you've done what your mama told you never to do -- throw good money after bad.

"If you're not equipped to help someone establish a budget, then require that the person see a qualified credit counselor. Send the person or couple to DebtAdvice.org or call 1-800-388-2227. DebtAdvice.org is a service provided by the members of the National Foundation for Credit Counseling."

"Even if a friend or family member's foreclosure is looming, don't let that person's desperation result in your giving money that in the end will just postpone the inevitable. Help if you can, but in a way that means your generosity won't be in vain. "

Money Matters: Helping the kids with their expenses

Sally is feeling good about how she's handling the helping hand she gives her adult son: She's offered to pay for day care. Her son is in the middle of the struggle years--finished with graduate school but just starting his career; ditto for his wife. Right how, with a one-year-old, costs are suddenly high [day care; bigger apartment] and income not quite what it will be.

Day care is not an inconsiderable expense in the city where her son lives--close to $18,000 a year. Fortunately, Sally can afford it. She's still working and so is her husband and the father of her children. Nonetheless, it's a bite out of their budget, and Sally is proud that she's paying the tab "with no strings attached." That's what she likes about the arrangement: She pays the bill and she doesn't have to concern herself with whether they are doing with the "loan" what you want them to do with it. It's control without actual control.

Or so she thought. One Saturday her daughter-in-law came by with the baby so Sally could babysit while the daughter-in-law ran some errands. No problem. Sally enjoys taking care of the baby. It's her first and he's delightful. When her daughter-in-law got back to the house, she pulled out her shopping bag to show Sally what she'd gotten. A beautiful outfit to wear to a friend's upcoming engagement party. Sally got a glimpse of the price tag and flipped out. It was, she told me later, twice as much as she would ever spend on an outfit. In her mind, here she was shelling out $18,000 a year for day care to help her son's family get through the "struggle" years and here was her daughter-in-law splurging on a high-priced blouse and skirt. Sally resented it.

So the question is whether we can ever cut the string--the tie between gift and spending? Do we have the right to control the money we help our kids with? Andif we do, will they resent it? Will we feel uncomfortable? I come from a family where my widowed mother was generous but there were strong and bounding ties to what I did with her generosity. So personally, I am all for giving the gift and letting it go. Don't look back. Just assume you've helped and move on. But is that reasonable? Should there be guidelines--a blueprint for use; a performance measure of sorts--when we help out our children?