OK. It's official. Every recent survey I've seen says our generation is generous to our grown children: nine out of 10 of us give them a needed financial boost from time to time. (The latest version of that stat is in a survey by Ameriprise Financial; you can find it at ameriprise.com/presscenter ). The Bank of Ma and Pa opens up when the kids are in their 20s (helping mostly with college loans, buying a car and free rent at the old homestead) and keeps on giving even when the kids are well into their 40s.
Here's something else the surveys find: It's not the kids who are demanding the help. Financial planners and real estate agents who see multigenerational accounting in action say it's more about generous parents than spoiled children. We are responding to financial challenges our kids face that we may not have had to deal with: staggering student loans and high-priced real estate are the two big ones. But I see a lot of other little things, like the creep of monthly bills just to maintain technological currency--the cell phone and texting; high-speed and WiFi Internet connections; a cable connection; iPods and iTunes. And that's before they need BlackBerries.
Now that we know they need our help and we give it, the survey I'd like to see is whether we give with or without strings attached. And even when we don't, do we inadvertently put a tit for tat on the money?
String-attaching is a form of custodial financing. It implies an on-going say in your grown child's life. And, according to Carolyn Hax, an advice columnist who appears in the Washington Post, when a parent remains in the parent role too firmly and too long, kids still see themselves as kids; they develop a sense of entitlement to money and life shortcuts. Worse, resentments develop. and that's what the problem is with custodial finance.
Custodial finances," Hax writes , produce grateful, thriving children roughly 0 percent of the time, and ingrates with ill-tended stockpiles of seething resentment about 100 percent."
Sometimes the strings are not attached but the resentment flows the other way. A friend who offered to pay for her grandchild's pre-school tuition found herself annoyed when her daughter-in-law dropped by to show her a new dress she'd bought. It was a pricey number--much more than my friend spends on her clothes. She felt a lot of anger : "Why was I paying for preschool if she could afford to go out and buy herself expensive clothes."
Be careful what you offer if you feel there ought to be a certain type of behavior in return.