How to Cope With Adult Children With Money Problems

When your adult children have money problems, you're faced with a difficult decision: Do you bail them out to help them avert disaster, or do you refuse to help so that they'll learn to manage their finances on their own? It's a difficult question for parents who want to see their children succeed yet want to teach them how to fend for themselves. When student-loan and credit card debt, unemployment and other factors force your adult children into difficult financial situations, you can either let them solve their own financial problems, or help them temporarily but on your own terms.

Instructions

    • 1

      Assess your personal finances and your children's. If lending money will harm your own finances or your spousal relationship, reconsider offering financial assistance to your children. On the other hand, if you can afford the financial assistance and if it will help your child to become more self-sufficient --- for instance, if you're able to help with a down payment on a home and your child has demonstrated the ability to manage a mortgage --- then that's a request you can consider. In any case, offer to help your child assess his personal finances and create a budget so he'll have a clear picture of what he can and cannot afford. Unless your child understands how much she can spend on a weekly and monthly basis, she will not have a clear view of how to manage her finances.

    • 2

      Create a formal agreement for repayment of loans. Just as a lender would draw up an agreement for a borrower to repay a loan, parents should create such agreements if they choose to lend money to their children. Set an interest rate and a repayment schedule, perhaps with a stipulation that he must destroy all but an emergency credit card or stick to an agreed-upon budget, and insist that your child make monthly payments. Identify a set penalty if your child misses a payment, such as a late fee. Be willing to enforce the penalty so your child will be less tempted to skip payments.

    • 3

      Set clear expectations. Tell your children how much you will help them and for how long. For instance, if your child asks for help in paying off $10,000 in credit card debt, you might offer to pay off half of it with the understanding that you will not offer any other financial assistance in the future --- and that you will create a repayment schedule, as explained in Step 2. The choice of how much you offer and how you will structure your repayment plan is yours --- as it's contingent on your personal finances and appetite for offering financial assistance to your children.

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