It can be difficult to judge just how much you should—or shouldn’t—help your kids out
By Wendy Haaf
It’s natural to want to lend your adult kids a hand, whether in the form of caring for the grandkids, providing room and board during a return to school, or chipping in on the down payment for a home. But navigating how much to help—if at all—can be tricky. Here are a few things to consider before going ahead.
Your Own Needs and Motivations
Can you really fit groceries for another person into your monthly budget? Is helping with the down payment on a home financially feasible without jeopardizing your own financial well-being?
To answer such questions, you need to crunch the numbers—ideally with the help of a trusted professional, such as a registered financial planner or accountant.
“It’s always good to get an objective opinion about these decisions,” says Ellis Nicolson, a registered psychotherapist and registered marriage and family therapist in Mississauga, ON.
Remember that even relatively modest monetary gifts eat away disproportionately at your nest egg, says Jeffrey Kraemer, a Certified Financial Planner and president of TFI Financial Services in Winnipeg. “You’re not just giving away this money; you’re also giving away its earning power.”
“You need to be really clear about what the numbers are, and, if you’re part of a couple, have calm conversations when you’re not under pressure to make a decision about what makes sense,” stresses Moira Somers, a financial psychologist and the founder of Mind, Money and Meaning, in Winnipeg.
While you’re taking stock, it’s also worth examining how your emotions could be influencing your thinking, Nicolson says. Are you motivated to help by a true desire to support a self-reliant adult child’s efforts to improve her life or are your motivations misguided—such as feeling inappropriately responsible for the economy or feeling like a failure as a parent due to your son’s life trajectory?
“A lot of parents feel unjustified guilt when a child needs help,” Nicolson says. “And when we make decisions based on that, we get ourselves into trouble.”
When asked for advice, Kraemer reminds clients that it’s not their responsibility to make their child’s life comfortable.
Other things to consider are whether agreeing to a particular request or offering a specific type of help meshes with your own values, and whether these actions are likely to enhance your child’s welfare in the long term.
In some cases, that’s a pretty easy call. If spending time with your grandchildren is one of the bright spots in your life and providing some child care could help get your son and his partner on firmer financial ground, you probably aren’t going to hesitate to pitch in. Or if your daughter is returning to school to get a certification for a better job, you likely have few qualms about welcoming her back into the home. “If someone is showing initiative and you’re enabling him or her to move forward and to develop and grow, it could be a real source of joy to be able to do that,” Nicolson says.
But the choice isn’t always that straightforward. For example, while on one hand, parents like to be able to help kids financially “when they need it” instead of making them wait for an inheritance, this help could lead to a sense of entitlement, Kraemer says. He adds that he’s seen this situation repeatedly in his practice when, for instance, parents pitch in on a down payment on a starter home, only to be asked for another gift a few years later to upsize.
Somers has seen similar patterns unfold in a number of families when an adult child has returned to the nest. “Not only are the adult children not contributing economically, but they’re also not contributing other kinds of capital, such as labour and even social capital—participating in mealtimes, being supportive, and talking about what the family goals are,” she says. Frequently, she explains, such scenarios begin with a crisis.
“Parents are often trying to help kids cope with emergencies, but in some families, those crises never seem to abate,” Somers says. “It may start out with a layoff or graduation from university without any high earning prospects in place, and you step in to supplement.” In some families, she says, it simply becomes too easy for the child to get too comfortable and unable to move on. This is particularly common when a child has a mental-health or substance-abuse problem, Somers adds.
One way to counter the development of this kind of unhealthy dependence and to protect your own mental health and well-being is to set definite boundaries establishing exactly what you can contribute and what you expect in return.
“It sounds harsh,” Somers acknowledges. “Part of the difficulty is finding a way to maintain loving ties while also facilitating moving on. You really have to separate the decision from the relationship.”
Sometimes, that may mean turning a request down outright. In the case of a down payment on a house, for example, “if you don’t have a secure pension and you’re counting more on the value of your home being your retirement savings, you need to be willing to have honest and clear conversations with your kids about the fact that you simply can’t afford to help,” says Derrick Penner, a business reporter with the Vancouver Sun and The Province newspapers. In his book The Bank of Mom and Dad, Penner outlines tips for such discussions, including sharing your financial situation with your kids, even going as far as to open up the family books.
Penner’s book also lays out a suggested road map for families who do have the wherewithal to provide this kind of assistance. Among other things, he suggests sitting down together as a family and sharing detailed financial information, including a budget. Penner also recommends setting down on paper the terms of any agreement, such as the amount of assistance provided and, in the case of a loan, specific repayment terms. “Be very clear about who’s doing what and when,” he says. “Putting that in writing helps create real expectations about what is going to happen.”
While a written contract isn’t necessary if you’re providing child care or temporarily sharing your home, the same principle applies. For example, if your adult son is moving back into the nest, some of the details you should discuss ahead of time include whether or not you expect him to pay rent (and if so, how much, and when it’s due), how long he’s welcome to stay (for example, a certain number of months after graduation), and house etiquette (such as pitching in with certain chores and attending meals). “It’s really important to lay everything on the table, because the clearer our expectations are, the smoother the process is going to be,” Nicolson says.
One clue that the arrangement isn’t proceeding smoothly is feeling resentment. “I think resentment is a signal from a pretty wise part of us that we are doing more than is necessary or desirable, either for the other person’s well-being or development, or for ours,” Somers says. “So if you’re feeling resentment, you need to come to a very quick stop and figure out what’s going on.” Solving the problem may simply involve discussing it as a family and re-establishing the ground rules, or perhaps finding another way to help.
“There are creative things families can do—it’s not a case of one size fits all,” Somers says. She gives the example of a client with an adult child whose chaotic life led to repeated requests to cover expenses. “Part of our work together was to get her to think clearly about the kinds of needs she wanted to respond to. She decided she didn’t want to respond to emergencies, but to be proactive and to know exactly how much money she could give per month, so that part was under control. Her decision was to buy a certain dollar amount of groceries and gas each month by giving her child store gift certificates, so the money couldn’t be used for other things,” Somers says. “That way, she had peace of mind that her grandchildren were fed, even when she had to say no to other requests.”
Your Other Children
It’s understandable when parents get swept up in helping out one child who, for one reason or another, hasn’t been as successful as his or her siblings. However, “when parents are viewed as favouring or supporting one of the kids at the expense of the others, that can lead to a lasting legacy of pain,” Somers says.
Consequently, she recommends periodically re-evaluating how much help you’ve given each of your children and, in the event of a problem, openly discussing the details and your estate plans as a family, so that everyone can share his or her feelings and any thoughts on how to make all of the siblings feel equally loved and valued.
“Loving families want to help each other,” Somers says, “and it can just take some time to figure out how to do that.”