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Money Matters: Caught in the web of generosity guilt

The subject is a tricky one: Generosity guilt. If we share the wealth with our grown children in the here and now, do we risk doing them more harm than good? Do we do more harm than good by indulging them--and ourselves--in making life easier for them?

                       

It's a question we were hashing out with friends where we were house-guests at their home on a lake in a development where the neighbors tend expansive lawns and mind lush rose gardens. Both our friends are recently divorced from their previous spouses. Paying the bills for the lakeside house--its dock, two boats, swimming pool, six bedrooms and huge windows overlooking the lake--is not a problem for either of them. Moreover, they have the money to travel--for pleasure and to visit their grown children who live in various cities throughout the country.

His three children are recent college grads feeling their way career-wise. He is mum on how he does or doesn't help them. Not so her. She bubbles over with fears that she is overindulging her two daughters who are in their late 20s and early 30s and not living anywhere near the level their parents eventually achieved.

"I feel guilty," she says of her willingness to give her daughters (both of whom have small children and husbands) money, treats and other indulgences whenever they ask or she feels they need them. "I'm a terrible patsy," she says, while her current partner nods in emphatic agreement. "I'm an endless stream of money for them." At the same time, she confesses to worrying about their psychological health. "I feel guilty that I enable them to be dependent on me. I don't make them stand on their own two feet. It wouldn't hurt them to be self reliant, but it gets complicated."

One of her daughters has what the mom calls "a black cloud that follows her"--a child needed surgery and there were medical bills over and above insurance; a mistake was made when starting a business and it required cash to rectify. "She's under a lot of stress," says my friend. "I worry about her mental state. If I can relieve her stress by helping her financially, I want to do it." That said, she would like her daughters to distinguish between I need and I want. And to feel less "entitled." When shopping with one of her daughters, the two of them saw necklaces the daughter liked. "She wanted two of them," the mother says, adding that she put her foot down, sort of. "I told her no, just one." 

Her desire to indulge her children is mixed with few rules over how far the giving should go. The indulgence argument is simple: She has more than enough money to take care of herself. "I get to do everything I want. I have not said 'no' to myself on anything," she says. "Why make my children miserable for lack of money when they're going to get it anyway?"

Being guilty about being generous is awkward--a conflict in competing values, a feeling of ambivalence about which value should take precedence. This lack of clarity is a point Gretchen Rubin makes in a post on PsychCentral  when she writes about wanting to do one thing but wanting something else that conflicts with it. Two of her examples: I want to eat healthfully; it’s wrong to waste any food. I want leisure time when I come home from work; I want to live in a house that’s clean and well-run. "These days," Rubin writes, "when I’m trying to get myself to pursue some course of action, I work hard to make sure I know exactly what I expect from myself, and why, and what value I’m choosing to serve."

Generosity guilt is certainly a push and pull between two values--and which one wins out depends on a whole lot of other values: does a grown child need support because he or she is doing work that helps others but doesn't pay very well? If we value such work, we might chose to enable our child to continue doing it and not suffer the consequence of living within low-income means. A similar reasoning applies to paying college bills or support during graduate school. And if a grandchild needs medical care not covered by insurance, doesn't it make sense to cover those bills that would otherwise stress the parent, our child? On the other hand, two necklaces versus one or even none is a different value.

There's another way to look at the guilt side of generosity guilt: As a manifestation of helicopter parenting.

The question Eli Finkel and Grainne Fitzsimons pose in a New York Times story, "When Helping Hurts" is on point for those of us who help our grown children financially.  "How can we help our children achieve their goals without undermining their sense of personal accountability and motivation to achieve them?"

Their answer, based on research they have reviewed, is a pretty solid guide to those of us like my friend who worry about the complications of generosity guilt: "...Our help has to be responsive to the recipient’s circumstances: it must balance their need for support with their need for competence. We should restrain our urge to help unless the recipient truly needs it, and even then, we should calibrate it to complement rather than substitute for the recipient’s efforts."

 

 

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Money Matters: Retire? Not as long as we feel our grown kids need our help

A friend and i have this conversation almost every time we meet for coffee. We are both still working--me part time, she full time. We have other projects we'd like to attack but work pressures get in the way. We both admit that part of why we continue to toil away is the money. Not that we need the cash to survive or even live well: we've both got adequate retirement nest eggs and pensions. Rather, we like the extra money so we can spend it on our grown kids.

It is a luxury to be able to do things to help them out--she likes paying the daycare tab for her grandtwins to make sure they are going to the best possible facility. I like sensing a need and providing for it--be it summer camp for a grandchild or a cleaning lady. [My story on Great Gifts for Grown Kids is on nextave.org.] Our paycheck feels like a windfall that we're free to share--no questions asked by our spouses or household partners.

At least this is what we tell each other--and possibly ourselves. It is, of course, more complicated than that and we're hardly alone in staying on the job past the "normal" retirement year. In 2005, 20 percent of all middle-aged parents were the primary source of financial support for a grown child. Now, 27 percent of parents fit that description, according to a recent Pew Research report:

As I've noted in previous posts, the recession/sluggish recovery is part of the reason we are helping out our kids--it has taken a huge toll out of the earnings of young adults. In 2010, according to the U.S. Census, the share of young adults who were employed was the lowest it had been since the government started collecting these data in 1948. Moreover, from 2007 to 2011 those young adults who were employed full time experienced a greater drop in average weekly earnings than any other age group.

So we soldier on. But supporting our kids--whether as an indulgence or to carry them through hard time--is only part of the reason we're still on the job. A lot of us are in better health than our counterparts a couple of decades earlier--and we may live longer. In which case, we like the idea of piling up the resources--or letting the piled-up resources lie there untouched while we use the still-on-the-job earnings for spending sprees. We don't want to outlive our nest eggs and be a burden to those whose loads we've just helped lighten. Or is that part of the indulgence factor? 

 

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Emerging Adults: What, me worry? All about a college grad who lacks ambition, to say nothing of a job.

I had lunch with a friend  who was worried sick about her college-senior son. Her complaint: He is directionless and unable to take action to get a job. Not only hasn't he signed up with his college's job-search office or applied to opportunities his mother has suggested or unearthed. He hasn't even written a resume--no less let his parents review it for him.

           

His post-grad plans, such as they are, include living in an apartment with his current roommate--a chemical engineering major--who landed a high-paying job with a corporation. How will he pay the rent? his mother asked. "He told me his roommate might help him out for a few months," the mom says, clucking her tongue and getting angry all over again.

It's scary. College days--and the comparative irresponsibility of those years--are coming to an end. Reality needs to be faced. When she was his age, this mom says, "I knew no help would be coming from my parents. I was on my own. You can bet I had a job by the time I graduated."

These years when our children are "emerging adults" are tricky ones. A lot of "tough love" v. "helping hand" decisions are suddenly upon us. Job  hunting is no one's idea of a good time. My friends older son, who graduated from a top liberal arts college, is still struggling to find a "career" job. He's taking himself off to graduate school next year--he sees that as the only way to get ahead in his field. His younger brother can't help but know how tough it's going to be out there. A good athlete and student, he seems almost unnerved by having to try his wings in an arena where he doesn't know if he'll be "good" or not. 

Mother and son are barely speaking at this point. The dad's job has taken him out of the country for long stretches so she feels she is on her own in guiding this talented but un-ambitious son.

I try to reassure her that he will grow out of his lackadaisical style, that he will figure things out.  [I've written this post on the outgrowing phenomenon.] That's what a growing body of literature suggests will happen. For my friend in the eye of the storm, it's hard to keep any perspective about eventual growth and growing up. Not when so many of her son's friends have done so already.

 

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Emerging Adults: When is it time to cut the cord on financial support?

 These have been rough economic times and they aren't over yet. Young adults (recent college grads in particular) are having a much harder time than we did in latching onto a career job--harder even than their older brothers and sisters. There are  economic stats and charts ad nausea that support the discouraging outlook.

All of which brings up the question: Should we help support our struggling young adults and if so, for how long?

                                                  
  

The question is discussed in a recent column by Carl Pickhardt who writes about adolescence but often about the upper end of a still-turbulent age--the 18 to 23 year olds. Here are some his observations about extending their financial dependence on us:

--Some of us may "enjoy parenting and don’t want to quit or don’t know when to quit or believe a period of older adolescent struggle is no time to quit or that a good parent never quits or they have an older son or daughter who doesn’t want them to quit."

--"Just as parenthood doesn’t come with a set of directions for how to get started, there is no fixed schedule for financial letting go. Thus many parents continue their parenting by offering extended help, often of the financial kind, until a firm hold on young adult independence is finally gained."

--"What age should young people be expected to live dependently at home before leaving and beginning their actual independence? There is so much cultural variation. In the United States, we seem to have a common parental expectation that after high school graduation age, young people should be ready to move off more on their own. ...The point is: there is no universally fixed schedule for when the departure from home and the undertaking of full financial independence should begin."

--"In one sense, the young person who claims the inability to “afford” to live independently on the little money they can make may not exactly be speaking the truth which is that they can’t live as comfortably as when living with parents. In fact, electing comfort they may be missing out on learning some pretty powerful survival skills such as doing without, scraping by on less, prioritizing fundamental needs, buying cheap, sticking to a budget, making ends meet, living within one’s modest means, and maybe working more than one job to get from one week to the next to support a fragile independence. So if your son or daughter is up to the hardship, don’t automatically jump in and try to spare them the challenge."

--"You want parental help to foster self-help, not discourage it. This is why the helping contract must be conditional: 'Before we help you, we need to see efforts (actions, not words) of self-help from you first; and once we start helping you, we need to see evidence that you are gathering more power of independence as you grow.'”

--"[P]arenting is a lasting commitment -- to be there for your children whatever their age, not only in constant love, but in times of need. Life is an unpredictable journey, what Thomas Wolf called “the groping accident of life,” where happenstance for good and ill plays a huge role in the challenges that arise and must be met. It is a source of security to know that membership in family is life-long."

To end this post on a more mundane note, here's a chart reflecting a study by Pew Research Center on the change since 2005 of the percent of us who are helping to support our young adults.

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Our kids coming out of college have been struggling--it's hard to find a job, no less one that is a stepping stone to a career. A lot of us are supporting those kids, either by hosting them rent free at home (goodbye emtpy nest) or giving them a monthly stipend while they job hunt. When times are tough, tough love doesn't quite seem the right answer. But when does the helping hand stop? Even if we can afford it, is there a point at which we have to tell our kids to sink or swim?

That was a question Carolyn Hax dealt with in a recent column. A mom, whose 26 year old daughter had had an assortment of odd jobs, finally landed a job at an art gallery--a job in her career arc. The mom has continued to give her daughter a $2,500 a month stipend to help cover living expenses. But she would like to break the habit. "I feel she should shoulder more of her own expenses, given what she earns. There always seems to be some unexpected expense that crops up, though, preventing me from cutting back my support." The latest unexpected expense: the daughter wants to quit the job and open up her own art gallery with a co-worker, who would provide the financial banking--but not a living wage for the daughter. 

The mom wants to retire but her retirement income isn't big enough to continue to support her daughter at the $2,500 a month level. There is a nagging reason why this mom keeps shelling out money: If her daughter fails at her endeavor, she might be destitute and "then she might have to move back in with me, which would be an intolerable situation."

It's easy enough to say, as Hax does, "Cut this parasite off." When the daughter worked odd jobs, Hax says, the mom was an enabler laboring under the fig leaf of need. But now, "you have proof that you're not preempting poverty, you're insulating her from the cost of her choices."

The fear for many of us is just this: if we don't help out, our children will slip into living in a way that we can't tolerate--and it will happen to them (guilt-inducing music in the background, please) while we have a comfortable place to live and more than enough food to eat. I hear friends raise the question of whether we owe it to our children--and to ourselves--to keep them out of poverty while they find their footing. The issue they raise: Can we afford not to do it?

Tough questions. And hard to deliver the tough love answer to our kids. There are practical issues--what happens when we can no longer afford to help, or like this mother, are ready to retire but can't afford to do so until our children have made their way up the career ladder. By continuing to support them, are we standing in the way of their being able to take care of themselves.

Carl Pickhardt, a psychologist who specializes in adolescence has this observation for parents of young adults: "Just as parenthood doesn’t come with a set of directions for how to get started, there is no fixed schedule for financial letting go. Thus many parents continue their parenting by offering extended help, often of the financial kind, until a firm hold on young adult independence is finally gained."

The tough part is not the tough love but knowing where that line of independence is or ought to be.

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Money Matters: The means to help our grown children

This little graph explains a lot. Despite the devastation of the recession and the lingering downturn, many of us with grown children are willing and able to lend or gift our kids money--to pay off debt, to get a start in life. Yes, our 401ks suffered in the 2008 debacle; some of our homes are underwater [literally--thank you, Hurricane Sandy] and figuratively). But evidently, our wealth has been coming back or it survived the hard times. According to a recent Pew Research Center survey, we of the baby boomer generation suffered less--lost less wealth than other groups and overall--in terms of financial loss--are in much much better shape than our 20- and 30-something children.

Why did the Great Recession hit households headed by grown kids in their late 30s and early 40s so hard? The federal Survey of Consumer Finances suggests it gets down to housing. For most Americans, equity in their homes represents the bulk of their wealth. The collapse of housing values in the middle of the past decade sent personal wealth into a nose dive for just about everyone, regardless of age. Overall, though, the Consumer Finances survey found that median home equity—the fair market value of a home less the amount of the outstanding mortgage and other liens—fell by about a third (32%) from 2007 to 2010. And U.S. Census data released in June found that most of the decline in median wealth between 2005 and 2010 can be attributed to sinking home values. We who've owned our homes longer and paid off more--if not all--of our mortgages, are coming out of the Great Recession in better shape.

All of which translates into a fuller bank account and the wherewithal to be generous to our grown children, should we choose to be.

Re-Nesting: Those emerging adults may be moving out and on--and soon!

He's 24. He's got a job. He's still living at home.

My friend Cathy is beyond frustrated. Her son is not helpful around the house. She's tired of asking him to take out the garbage, empty the dishwasher or run an errand--in the car she and her husband are providing.

Part of his inertia is his job history over the past four years. A graduate of a high-tier college where he got more-than-respectable grades, he's taken internships with  nonprofit organizations--even worked one that involved relocating to a destitute Central American country for a year--but doesn't feel he's on a career path. The current job is not in his field and is only a one-year contract. He's applied to graduate school and hopes to go next year. So right now he's feeling immobilized--despite his parent's suggestions that he have a plan B for living arrangements: They may sell the house this summer and move closer to the dad's job.

It may not ease her frustration to know that her son is part of a recent trend: the ever-so-slow growth in household formation. It's not only frustrating for those of us with adult children living at home, it's also a drag on the economy. Each time a household is formed, it adds about $145,000 to output that year as the spending ripples through the economy, according to an estimate last year from Mark Zandi, chief economist at Moody’s Analytics [as reported in the New York Times].

Over the last year, household formation has been picking up as this map from the New York Times indicates.

Source: Census Bureau, via Haver Analytics.

The pickup, the Times reports, "is probably related to job growth, which has enabled multi-generational households to spin off into multiple new homes." 

The overall trend is good news for Cathy. Her son may be forced to move if she sells her house and will certainly move if he gets into graduate school [he's applied to schools one and two time zones away] and may even be heartened to move out by his improved chances in an improving job market.

“They can only live with their parents for so long," Zandi noted. "There are powerful centrifugal forces in those households, on both side. As soon as they have a chance to get out, many will take it.”

All of which could help Cathy feel better about putting her house on the market--That is, if her second son, graduating from college this spring, finds a more favorable job market than his brother did. It's still too soon to "amen" to the pressures of the re-nesting stage.

 

Money Matters: The final arbiter in helping our kids out financially

When our grown children need financial help and we have the wherewithal to make it happen, our decisions generally fall into one of two camps: Either "Yes! I'd rather help my child now than leave it to them later. " or "No! They're independent adults. They need to stand on their own two feet."

But real life has a funny way of coming along and moving us somewhere in the middle. The "no way" parents may see a well-conceived business plan and be asked by their entrepreneur-to-be to invest in the venture. Or the "Yes" parent may be asked to fund a dream-come-true trip around the world and demur, reasoning, "This is something my grown child should finance himself."

Readers of this blog may remember my friend Dick who refused to lend his daughter $1,000 to visit a friend whose mother had died but lent his son $10,000 to buy a boat. His calculus, he said, was not so much the use of the money but the fact that he had lent his daughter money on several occasions and she never repaid it. His son often borrowed money from his dad but he always repaid it. Clearly, the son's credit standing was higher than the daughter's.

Then there are friends whose 40-year-old, divorced son is struggling to gain traction in a creative field [filmmaking] and whose neighbor's son [food photographer] is going through the same hard time. When I blogged about that situation, I pointed out that my friends wanted to--and continue to--support their son's "dream," even though their son tells them he doesn't want to take their money and is not above taking on low-paying temporary jobs to help make ends meet. But they look askance at the neighbor, who supports his son, even though the son refuses to take temporary gigs and the son's wife, now pregnant with the second child, doesn't work outside the home, either. My friends thought the neighbor was being an enabler and should give the son a dose of "tough love" since he seemed to be making no effort to support his growing family.

When we decide whether or not to help support our kids or lend them money, there may be ostensible reasons for saying yes or no--an unworthy cause versus a desperate need. For many of us, though, our decision may hinge on whether we smell a sense "entitlement,"--that is, that our children expect us to open our wallet no matter the reason, request or need.

There's at least one more way to think about whether to loan or not loan.

Barbara Nusbaum, a New York-based clinical psychologist specializing in money psychology, says she sees nothing wrong in wanting to share the wealth with grown children—especially if a family can afford it and it’s done with “a spirit of loving generosity.” But she also notes that when it comes to parents and their grown children, money has many meanings to it. “You can give money in a generous way and it’s about support, love and generosity,” she says. “But it can also be about control or about creating dependence.”

When parents are invested in giving their children money, Nusbaum continues, “they will expect something back and want to control the decisions of their adult children. They may give money for one purpose and the children may spend their money in a different way, and then the parent feels resentment.”

So, when is it time to snip the financial strings?

For Nusbaum, a good test for parents is to ask themselves whether the financial support is something that will lead to their child’s independence. By way of example, she says a child who hasn’t been able to get a job might ask for money to go to graduate school, hoping it will lead to better job opportunities. “That might be a worthwhile,if it will allow that young adult to become independent,” she says. But if the parent is supporting a child and there is no movement in terms of finding a job or career, it might be time to tell the child “I can’t do this for you anymore.”

Money Matters: Our college grad's expenses are our expenses--our worry too

Will the surveys never stop? Here's another one--this time from Ameriprise Financial--on how generous we baby boomers are toward our grown-up children--and how worried we are about their future financial security and ours.  

A December 2011 survey of baby boomers with $100,000 or more in investable assets reports that nine out of ten--93 percent--say they have provided some kind of support to their adult children. Paying for --or lending money for--college tuition comes in at 71 percent; help in buying a car, 53 percent. Parents are also helping with the upkeep of life's many expenses, like helping to pay for car and health insurance, rent and utilities.

Where does the money come from? 45 percent take it out of their spending money; 35 percent hit their regular savings accounts (about 8 percent tapped into retirement accounts) and nearly 15 percent take out loans to help their kids.

At the same time, more than one-third--35 percent--are worried that their children haven’t learned to manage money responsibly. More than that--nearly half--say their children don’t understand what it takes financially to prepare for retirement--even as they report that they are spending what they should save on their adult children.

As to those adult children at the receiving end, the survey found that more than half of them point their fingers back at their parents: they say they rarely or never talked to them about how they budget the family’s money.

Should we be surprised that kids coming out of college today are drowning in student debt? Or what the New York Times recently headlined as A Generation Hobbled by the Soaring Cost of College

 

Money Matters: The stats on how we help our kids buy a house

Yes. It's yet another survey on how generous our generation is to our children. This one comes from Better Homes and Gardens Real Estate and keys in on the ways in which we help our children buy a home.

According to its December survey, nearly one in five self-identified baby boomer couples had assisted at least one adult child in a home purchase. This help came in the form of down payment assistance, outright purchasing or mortgage co-signing.

How do we do it? The survey found that many of us are digging into our savings or we're dipping into emergency funds or retirement funds in order to come up with the average $10,000 to $30,000 down payment for an American home.

Do we expect to be repaid? The survey doesn't say. For some of us, it's repayment enough to see our children living in a nice, solid home that someday--should the housing downturn ever turn around--will appreciate and bring them a modicum of good fortune. If they eventually flip the house and make a killing (those days may never return but....), they might share the pot of wealth with the ones who made it possible.

Few of us can count on that one.