An open letter to parents who financially support adult children

[Parizade]

Saw this on USA Today this morning.
http://www.usatoday.com/story/money/personalfinance/2016/03/27/open-letter-parents-who-financially-support-adult-children/81808262/

I let my son and his wife live with me rent free while they completed their higher education, and did offer some help with tuition. My rule was as long as they were pursuing an education I would help them (I also made it clear that payback would be expected if I needed help in my old age).

Now they are on their own and making their own mistakes. I help occasionally, when they are reaching the end of their rope and need a break, but for the most part they are learning to manage their finances. I wonder sometimes if I helped them too much, but I tell myself they are both in careers they love and doing well. I don't think they would be as happy with their lives now if I hadn't sheltered them while they finished school.

[chemistk]

My parents helped me throughout school by paying for my room and board and a couple other expenses, the rest was up to me (student loans and working). After I graduated, I was fortunate enough to live with my (then future) in-laws while I found a job and an apartment. Otherwise, I was on my own after college. Growing up, my brothers and I never once received an allowance - chores were done for free. If we wanted to buy something or go somewhere, that money had to come from birthdays or from working.

Learning in that kind of environment is one of the best things my parents did for me. There have been a few situations where I needed an extra couple hundred dollars and they loaned me the money, I always paid them back at the first opportunity. Since graduating school, I've never really felt incapable of managing my finances and I have to credit a lot of it to my parents for choosing to put increasing levels of responsibility on me and not helping me out (unless I asked) - even when my checking account dropped below $10.

I have to agree with the thought of helping out adult children when student debt becomes all-consuming, but unfortunately there are too many people in my generation who are quick to look to their parents to make their money problems disappear - and too many parents who are willing to acquiesce.

[MonkeyJenga]

I'm just gonna leave this thread here... http://forum.mrmoneymustache.com/journals/we-are-family-unfortunately/

[GrowingTheGreen]

I think it largely depends on the circumstances. If your child demonstrates maturity and responsibility, I don't think it's necessarily a terrible thing to help out with something like school or a down payment for a first house. Are they doing crappy in school because of partying or can they not afford a house because they're always wearing the latest clothes? Maybe it's time to pull funding and give them a reality check.

Perhaps the difficulty is for parents to look objectively at the situation and ask themselves "is my child responsible financially?"

[Warlord1986]

My daddy always said he was happy to help me out with school. His parents helped him out, and it's understood that I will pay it forward when the next generation makes an appearance. Besides that, I got good grades and worked all through school. Since graduating, I've gotten a job and made it a point to save a good chunk of my money. If I had a major, unexpected emergency that my savings couldn't cover I wouldn't feel any shame in asking for help.

Likewise, if Mom and Daddy found themselves in need of assistance in their old age I would happily give it.

Giving help to adult children isn't necessarily a death sentence for their self-esteem or their financial survival skills.

[EngineerYogi]

I was always the child trying to independent well before I was ready. I got married to a man in the armed services and moved away from home at the age of 17. I promptly enrolled myself into high school to finish my diploma, obtained a part time job at the local restaurant and located an apartment for myself and DH to live in. I then earned enough to qualify for scholarships and went to the nearby community college for close to free. I do remember asking my dad for help out on my cell phone bill on a few occasions ($60/month at the time) because our budget was tight. Now 10 years later I have my MS in engineering, a well paying job (check out my journal), less than $5k in student loans left and make close to my dad's salary. I had to help them out on funds for vacation this summer. :/

My sister is 23 years old(soon to be 24), working as a phlebotomist for a hospital and still living at home... One of the reasons I had to help my parents with money on the vacation this summer was because my sister managed to overdraft my parents checking account by purchasing something with my Dad's Amazon account information. >_< They don't learn though. I forwarded my dad the article link, maybe it will help.

[renata ricotta]

I think it largely depends on the circumstances. If your child demonstrates maturity and responsibility, I don't think it's necessarily a terrible thing to help out with something like school or a down payment for a first house. Are they doing crappy in school because of partying or can they not afford a house because they're always wearing the latest clothes? Maybe it's time to pull funding and give them a reality check.

Perhaps the difficulty is for parents to look objectively at the situation and ask themselves "is my child responsible financially?"

As long as everyone is mature and responsible, and doesn't take kindness for granted, I think it's not only not a bad thing, but really a lovely thing to be generous with family.

My in-laws have several guest rooms and a basement apartment and love company. Their home is open to any relatives (or in some cases, friends or friends-of-relatives) who may need a place to stay. They've housed nieces and nephews whose parents kicked them out of the house at 18 through their college years, whole families of cousins who needed a place to stay for a few months while building a house, their adult children and family, and lots of other situations. Because everyone is a grown-up about it and communicates respectfully, without entitlement, it's worked really well. We've also received monetary help from them when it would be mutually beneficial to all parties. (Parents-in-law gave me a student loan at better rates and safety than I could get from the market but at better rates than they would get in their savings account; Grandparents-in-law did the same thing with our first mortgage). I am prepared and happy to help any of my family members when needed in similar ways. I think it's a beautiful part of a familial safety net. There are definitely horror stories of family members who feel entitled to help and take it for granted or use it poorly. I suppose I'll cross that bridge when I come to it, but I wouldn't want to have an "every man for himself" mentality just because it doesn't always work out well.

Bottom line: Independence and fiscal responsibility are great things, but you don't always need to prove it by each person separately paying for all of their living expenses, particularly where pooling resources among family members works just as well, if not better. After all, I think it's really important for spouses to not be financially dependent on each other, but my husband and I don't maintain separate apartments just for the hell of it.

[coin]

My three siblings (27, 24, 18) still live at home and are subsidised by our parents. I'm the odd one out for not remaining in the family home, haha.

My parents can definitely afford it, though they're charging the eldest two rent. Even with having to pay board my brother and sister are making out like bandits, I bet their savings rate is way higher than mine purely because mum and dad take care of them.

I do worry about my siblings, because if my parents financial or physical situation rapidly deteriorated they would all be in for a huge shock. Sometimes I wonder if my sibs development as adults has been stunted because my parents do all the real "adulting" in the house (bill payment, grocery shopping, laundry, yard work, etc). Luckily my parents tell the older two to fund their superannuation, save and invest, but I don't think they feel any pressing need to worry about it like I do.

That said, my parents are doing far better than a member of my extended family, who continually has to bail his kids out of whatever stupid decision they've made this time. He knows it's a problem, but in the moment he gets sucked into their swirling vortex of self-inflicted drama.

So yeah, it works well in some situations but in others it's just enabling.

[Cassie]

We have let the kids live with us when they have needed too (ex: finish college, one became disabled and needed to retrain for a job they could do, pay off debt, etc). It was not a burden on us. Sometimes we bought their food and sometimes they did depending on the situation.   WE have helped with small amounts of cash or loans. I think helping adults to live irresponsibly is wrong but there is a difference.

[arebelspy]

That was a phenomenal article. 

Letting your children fail is good for them.  Teach them, early, that failure is an opportunity for growth.  A chance to learn. 

[BlueHouse]

My 20-year old nephew is living with me for the past 8 months.  He's working on figuring out what he wants to do with his life. Or more realistically, having a job that he likes while waiting for his parents to come to peace with the likelihood that their kid will probably never go to college, or take the same path that they chose.

I live in a HCOL area and charge him minimal rent. There's no doubt in my mind that he's learned a ton from living here and being more independent than he's ever been before and living away from home has put him in a location with better opportunity. But he doesn't progress until I nudge him to take on more responsibility. Each time, he rises to the challenge, but I do wish he would learn some of the lessons faster. There is a fine line btwn what he is capable of and what he is manipulating me for. And I don't get it right most of the time. But at least there is progress.

He will likely never have a high paying job, and although I've made some progress explaining how budgets work, he may not be capable of long term planning (but then again, he may just be complacent with the sweet deal he has now with me.)

I wrote about his situation in an earlier thread but haven't updated it, mostly because I don't have a great success story. It's been more of slow progress with bumps along the way.

[ringer707]

I lived at home through college and law school. My parents were kind enough to pay for college, and I took out student loans for law school. My parents did pay all my expenses, which was extremely helpful, as there was no way I could have worked and accomplished everything I wanted to in school otherwise.

That being said, I've always maintained excellent grades, didn't party, and wasn't out blowing my parent's money on unnecessary expenses (I will admit to excessive Starbucks to get me through studying for the bar exam though, and I have no shame or remorse about that!). My mom and I lived (she still lives) on a 60 acre horse farm, and I have always been responsible for the care and maintenance of all of the horses as well as the farm. Since starting my first job four days after the bar exam, I've never taken another dime from my parents and closed on a house one year after the bar. We purchased a house connected to my mom's farm, so I still care for the horses everyday. I'm very thankful for my parents' support, both emotional and financial. It's a shame more people don't appreciate their parents like that!

[Spork]

Good article.

I have a sibling that's nearing 60 that was helped out (to her detriment) her entire life.  She's always earned plenty, but lived a lifestyle that was head and shoulders beyond what she could afford.  Dad just passed away.  She's nearing retirement and her lifeline just went away.

Oddly, her children had a bit of a hard time growing up -- mostly due to her ability to spend every cent they had.  And have turned out to be pretty awesome young adults.

[Stachetastic]

I just loaned my mother 2k over the weekend, so is there a reverse version of this open letter?

[Pigeon]

The letter  mixes some nuggets of insight with ridiculous sweeping generalizations.

It depends on the situation, the level and duration of help and the individuals involved. My parents paid for four years of a reasonably priced college.  I lived with them for about six months after graduating, while saving up a chunk of money to get started in life.  They did the same for my five siblings. I've been gainfully employed since then and I'm in my 50s.  They weren't financially ruined, and I haven't been either.  I'm putting my kids through college.  They are industrious, thrifty, hardworking and appreciative, and I would have no problem having them move in for a time if they went to grad school or wanted to save up a chunk of cash.

On the other hand, I have a cousin about my age whose parents encouraged him to go to an expensive and prestigious college and take out a lot of loans.  He has worked briefly selling ladies' underwear, set up a shingle as an executive recruiter, but also dealt in illegal substances.    He has always lived with his mother.  A few years back, he got in a bar fight.  My aunt called my brother to complain about having to pay for cousin's smashed teeth from the bar fight.  Go figure.  We have all tried to talk her into kicking the bum out, to no avail.  Cousin has just been arrested (again) this time for assaulting my now elderly aunt.

It's all about the individuals involved.

[Giro]

I just loaned my mother 2k over the weekend, so is there a reverse version of this open letter?

THIS!

My mother has been borrowing money from me since I was about 22 and got my first full-time job.  Early on, before I was as financially savvy, I loaned her about $10k trying unsuccessfully to save her from foreclosure and bankruptcy.  I should have just set the cash on fire, at least I would have felt some warmth for about 5 seconds.

[Stachetastic]

I just loaned my mother 2k over the weekend, so is there a reverse version of this open letter?

THIS!

My mother has been borrowing money from me since I was about 22 and got my first full-time job.  Early on, before I was as financially savvy, I loaned her about $10k trying unsuccessfully to save her from foreclosure and bankruptcy.  I should have just set the cash on fire, at least I would have felt some warmth for about 5 seconds.

Oh man! I really feel for you. Responsible children of irresponsible parents unite!

[Giro]

I just loaned my mother 2k over the weekend, so is there a reverse version of this open letter?

THIS!

My mother has been borrowing money from me since I was about 22 and got my first full-time job.  Early on, before I was as financially savvy, I loaned her about $10k trying unsuccessfully to save her from foreclosure and bankruptcy.  I should have just set the cash on fire, at least I would have felt some warmth for about 5 seconds.

Oh man! I really feel for you. Responsible children of irresponsible parents unite!

I've always learned more from bad examples than good ones.  I learned a great deal of what not to do while growing up and it's made me who I am.  Very grateful for a miserable, poverty-stricken childhood.  I will never be hungry or watch my children go hungry! 

[slugline]

The article doesn't really touch on it, but I wonder how much "help with a down payment" is inflating house prices in competitive markets...

More money chasing a limited supply of goods is pretty much a textbook story of inflation. I have the same theory about scholarships/grants/loans/parent money fueling inflation of college costs.

[totoro]

I have an entirely different view.  As long as the kids are in school or working to save a down payment they are welcome to stay at home no charge.  We will match them wIth a down payment and pay tuition and books.  If they are saving they need to demonstrate good money management or they may need to rent and pay their own way for a bit.  In hard times they are welcome back.

I'm not in agreement with enabling wasteful consumer behaviour or addictions, and would not do this, but I consider the North American model of leaving home and renting generally wasteful.  Particularly when early home ownership can be a big step to later fi and prices have appreciated faster than incomes.

Our eldest starts engineering in the fall and will live at home. I expect he will graduate with zero debt.  Hope he stays longer and saves up for a house.

[Parizade]

I consider the North American model of leaving home and renting generally wasteful.

I tend to agree.

[clarkfan1979]

I think it largely depends on the circumstances. If your child demonstrates maturity and responsibility, I don't think it's necessarily a terrible thing to help out with something like school or a down payment for a first house. Are they doing crappy in school because of partying or can they not afford a house because they're always wearing the latest clothes? Maybe it's time to pull funding and give them a reality check.

Perhaps the difficulty is for parents to look objectively at the situation and ask themselves "is my child responsible financially?"

I don't remember where exactly I heard it, but giving money when they don't need it can be really helpful. The adult child is already responsible. However, giving money when they absolutely need it will not be helpful because they haven't figured out how to be responsible yet.

[hucktard]

I just loaned my mother 2k over the weekend, so is there a reverse version of this open letter?

THIS!

My mother has been borrowing money from me since I was about 22 and got my first full-time job.  Early on, before I was as financially savvy, I loaned her about $10k trying unsuccessfully to save her from foreclosure and bankruptcy.  I should have just set the cash on fire, at least I would have felt some warmth for about 5 seconds.

Oh man! I really feel for you. Responsible children of irresponsible parents unite!

I'm right there with you. I have one parent who is borderline homeless another who lives on SS with no other savings. Each time they have gotten any sort of windfall in their lives (10-80K from selling a house or an inheritance) the money has been gone within a year. My father is about to get some money from an insurance settlement and the money is already spent before he got it! I don't even argue with him about money anymore. I would help them if I could, but giving them money certainly doesn't do it. I love both my parents, great people really, but damn they cannot handle money. I think having parents who need financial support is even harder than having children. At least with children you can hope that someday they learn to take care of themselves. Parents in their 60s, or 70s are not going to change and you can either let them suffer or provide financial help. The silver lining is that I recognized early on the financial mistakes that my parents made and I swore that I would not do the same.

[SeaEhm]

If my adult child(ren) wanted to live with me and I felt that they were not as financially literate as I would have hoped, I would charge them rent.

I would secretly invest that rent money into an account.  Then, sometime later, I would give it to them to help them with a larger purchase.

I know a lot of successful people who have lived with their parents for an extended period of time.  However, culturally that is the norm as well.

Live with parents
Move out, establish family
Parents move in with you as they get old

Depends on the circumstance.

I lived rent free with my mom until I was in my early 20s.  I turned out okay...
I think??

[Goldielocks]

The article doesn't really touch on it, but I wonder how much "help with a down payment" is inflating house prices in competitive markets...

A lot!  It is very common in Vancouver (but non BC residents buying second homes as investments masks it); and is often written about in Toronto.  It is like how home prices increased , lagging only a few years, the rise of dual incomes, then matched the rise of family "investments"...

It is so common here, that our bank mortgage rep asked us if anyone else was on title, and prompted us to say parents, etc.  I guess he often gets to the final close of title day, and the title does not match the mortgage papers.