Friday, October 14, 2011

The Elephant in the Room

You’ve worked hard and in retirement you are satisfied with the nest egg you’ve squirreled away to make the future just the way you want.  Then Surprise!  Your adult child comes to you in tears, in financial need.  Your question is “Where did I go wrong?”

You’ve set a good example.  You’ve saved, set up IRA’s and 401K’s.  You’ve paid yourself every payday.  Now the unexpected shows up in the face of your dearly loved offspring. Guidelines may be in order, not for love, but for loving our adult children in a way that encourages their financial health while keeping your own.

You know your savings account is not a sweet treat to be dispensed liberally without caution.  And the time for early conversation with your child about budgeting is well passed.  Now what?

Here are some things to consider when talking with a grown child about finances:

  • If she has lost her job offer your home until she can re-establish herself in new employment.
  • Examine the urgency of the present need.  If there is no urgency suggest she save for what she wants. (Remember that?)  If there is some urgency create a workable understanding on how she will repay the loan.  
  • Suggest sharing an apartment with a roommate.  

We are living in challenging times for young people.  So it is not surprising to hear of parents paying medical insurance or college loans to ease their child’s burden.  An important question to pose to the adult child is, “How will you manage your finances going forward?”

Draw the Line Together

We live in an age when commercial advertizing, especially on the internet and television lures people of any age to spend beyond their means.  Life style adjustment may be needed.  Like cooking meals on week-ends, having people over for pot luck suppers, going out to eat only once a month.  Young people don’t like asking parents for money, but making some basic changes in how they spend money can make a difference.  There is no one easy answer.  Each family can talk through the situation and come up a solution that works for everyone, parents included.  For example, if the problem is credit card debt, don’t take out a home equity loan to take care of it. If cutting up the credit card and creating a reasonable budget doesn’t work it may be time to consult a debt counselor to help her out of the hole. It will require swallowing some pride but there is a way out from under this money elephant. And what a relief when it’s gone!

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