Maybe you’re one of those parents who’s always bailing your grown children out of a financial hole.
You watch your just-out-of-college kids buy an iPhone, a plasma TV, spend $4.00 a day on their Caramel Frappuccino at Starbucks, even though you know they can’t afford it. Yet when they’re overdrawn on their checking account, maxed out on their student credit cards, late on their rent, or can’t make their student loan payments, you’re quick to swoop in with the money they need.
It’s natural to want to help your kids. Even when they’re old enough to be taking care of themselves, you don’t want to see them make financial mistakes that could affect them for years.
But if you want there to be any hope of putting an end to this cycle, before you bail your 20-something son or daughter out again, keep these three tips in mind:
- Be objective. Take into consideration why your kids need the money. If they got laid off, for example, or totaled their car in an accident, assuming the role of the emotionally and financially supportive parent is completely appropriate. But if this is the tenth time in six months that one of your kids is hitting you up for money, this may be a sign of an unhealthy pattern that can’t be fixed by simply writing a check. Your child could be showing signs of compulsive “debting.”
- Don’t enable. Consider the pattern you’re setting and the behavior you’re encouraging by not putting your foot down. If you’re always there to bail them out, your kids will never change their spend-happy ways because you haven’t given them a reason to. In their world, there aren’t any consequences to making poor financial decisions because you’re quick to pull out your checkbook, no matter what their financial slip-up.
- Set boundaries. Make it clear that your help is temporary. Next time, before you hand over any money, set some conditions: Require that your kids enroll in a continuing education class on financial management, watch them cut up one of their credit cards, or let them know that you expect them to sell off their nonessentials (iPod, TV, stereo) to pay you back. Be clear about how long you’ll help, and set a non-negotiable cutoff date — the day you stop handing over money, period.