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A big part of parenting is ensuring that your kids have everything they need that love alone can’t provide. That often means spending money. The cost of parenting in the U.S. is outrageous. Parents can expect to spend between $16,227 and $18,262 a year raising just one child born in 2023.
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If your kid is still under 18, you may be thinking, “At least when they’re 18 the parental spending will end!” Well, that isn’t as likely as you’d think. Nearly half (47%) of parents with a child older than 18 provide them with financial support, according to a report by Savings.com.
For lower- and middle-class families, and possibly even some wealthy ones, footing the bill of your “grown child” (quite the oxymoron) is a cumbersome and even dangerous expense — particularly if the financial support is needed once you’re in retirement, when your income may be limited.
What do you do if your adult child is asking for financial help? GOBankingRates spoke with money experts to get the five top tips for handling this situation because when an adult child comes to you for financial help, it can be a delicate and often emotionally charged situation.
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Ask Yourself How Helping Them Could Hurt You
The urge to help your children, no matter their ages, is inescapable for most parents. But remember, a lot of this is instinctual and not logical. This isn’t to say you should immediately reject your adult child when they ask for financial help; rather, it means you need to put the urge to save the day in check and think about what helping them out with money means for you and your money.
“Many parents struggle with balancing their desire to help their children with the need to prioritize their own retirement and financial health,” said Cliff Ambrose, FRC, founder and wealth manager at Apex Wealth.
“Financial advisors suggest you ask yourself how helping your child now could impact your future, particularly if it means depleting retirement savings or putting your own financial goals on hold.”
If, upon rigorous review of your financial situation, it’s evident that bailing your kid out is a bad or risky move for you, then you need to prioritize yourself and turn them down.
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Get To the Root Cause of the Ask
Before we get too ahead of ourselves, let’s discuss how you should approach your grown child’s request for financial help. Communication is important here; so is getting to the root cause of why they’re experiencing financial hardship.
“Experts stress the importance of assessing the why behind the request,” Ambrose said. “Is your child struggling due to a temporary setback, such as a job loss or medical emergency, or is the request part of an ongoing pattern of financial instability?”
If you can get to the root cause of your child’s debts or lack of sufficient income, you can then understand whether it’s right for you to even consider helping them out.
“Understanding the root cause will help you determine whether the request is a one-time need or indicative of a larger issue that might require a different solution, such as offering guidance on budgeting or career planning,” Ambrose said.
Consider Whether You’re Enabling Them
Let’s say your kid hits you up for money after he just got laid off and the partner he was living with dumped him so now he needs a new place, and he broke his leg which resulted in a large medical bill (or something catastrophic like this). Alternatively, let’s say your kid asks for money because they can’t make their monthly credit card payment after their holiday shopping spree and are really hoping to take that spring break trip with their besties.
These are wildly different types of scenarios. One indicates a one-time, bad-luck situation. The second points to immature and irresponsible behavior that, if you cave to funding it, could sign you up for years of bailouts. This will not only potentially hurt you financially, it will prevent your kid from becoming a true adult.
“It’s natural to want to support your children, but you need to be careful not to create a cycle of ongoing financial aid that could lead to dependency,” said Said Israilov CFP, wealth manager at Israilov Financial. “Regular bailouts might prevent your adult child from developing money management skills and building financial independence. This can lead to financial enmeshment — a situation where boundaries around money become blurred, creating feelings of obligation, guilt or entitlement that could strain your relationship and harm both of your financial futures.”
If You Decide To Help Them, Set Clear Boundaries
If it’s a safe, responsible and comfortable move to help your grown child out financially, you need to set clear boundaries with them before you give them money.
“For example, you might explain that while you’re willing to help, you have a set budget and can’t provide more than a certain amount without affecting your own retirement savings or other obligations,” Ambrose said. “This sets expectations and prevents future misunderstandings.”
Put Any Financial Help Agreements You Make in Writing
Money experts insist that if you’re giving your adult child financial help of any kind that you make the terms of the loan (or gift) clear. And that you do it in writing, like you would any other formal agreement.
“Whether it’s a loan or a gift, putting everything in writing including repayment plans or no-strings-attached terms helps avoid potential tension later,” Ambrose said. “In addition, many financial experts suggest using this opportunity to teach your child important lessons about money. If the request involves a large sum or ongoing support, it’s a good idea to have a frank conversation about budgeting, debt management and the long-term impact of borrowing or living beyond one’s means.”
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This article originally appeared on GOBankingRates.com: Is Your Adult Child Asking For Financial Help? Follow These 5 Money-Expert Tips
