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

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?

Money Matters: Can we still help our kids if the 401k melts?

A friend says she was only joking when she told her grown children she might have to borrow back the money she and their father had "lent" them to pay for college and graduate school.These are friends with a small apartment in New York City and a sizeable vacation spread in Vermont. But came the shock of the bear market and their portfolio has been sliced in half.

It's a scary time for them. They are both retired. They are tightening their belts: cutting off travel plans, eating out less, going to local movies rather than the Broadway shows, laying off the woman who cleans their apartment. But they still have to carry two homes on half a portfolio--and what if one of their grown children loses a job or runs into a financial problem? They've always been there to tide them through, and though they may joke with their children about "repaying" education "loans," what if they do need help with two mortgages--this is not exactly an easy time to unload a house or two.  

Are these troubled times going to see a shift: From comfortable parents always there as a safety net to help grown children in case of a fiscal emergency to parents who may have to lean on their adult children to survive.

Her last email to me read, "Let's hope for an uptick in the stock market." It went down another 300 points the next day.

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.