Money issues often cause stress in relationships, particularly when your adult children come to you for money. The situation may be dire, such as making their mortgage payment, or it may be what you consider frivolous, such as remodeling the kitchen. Whatever the reason, they've come to you with their hands open. And you're in a tough position.
"As a licensed professional counselor and life coach, I hear that cry for help often from parents whose children are grown," says Nancy Williams, author of "Secrets to Parenting Your Adult Child." "When do you say 'yes' and when do you say 'no' when your adult children ask for your financial help? When are you helping, and when are you hindering? How much is too much? 'Am I being selfish or unloving if I don't give them money when they say they need it?'" Parental worry and guilt kick in.
"The first piece of advice I offer is for parents to acknowledge that their children are responsible for solving their own problems and meeting their own needs. Parents can come alongside and offer assistance if/when/however they deem reasonable," Williams says. "The next question to answer: 'If I choose to help, will I be compromising my values or beliefs or putting my own needs in jeopardy?' Parents must remember that they are responsible for their own needs and must consider that reality as they reach out to help their children."
Williams hits upon the greatest concern: You need enough money to live on comfortably, especially if your investments have declined in value in this economy. Adult children in stressful financial positions, which likely have been brewing for a long time and may be causing stress in their marriages, aren't always able to consider your financial realities.
If your adult child is otherwise financially responsible and is experiencing a shortfall through no fault of his or her own -- such as from a layoff, injury or child's illness -- your values system may agree that your child has sound financial practices and simply needs a rescue. You then might agree to lend a reasonable amount of money. If your adult child has a history of borrowing money and not repaying or is vague about why the money is needed or spends unwisely, you do have a right to say no.
"Knowing how to set appropriate boundaries in relationships and with your grown children can make the difference in whether your life works or not," says Dr. Tina B. Tessina, author of 13 books, including "Money, Sex, and Kids: Stop Fighting about the Three Things That Can Ruin Your Marriage." "Most people think boundaries are set by telling other people what the limits are. But boundaries are really something you must create within yourself. Having the confidence to say no to another is one important aspect of creating boundaries."
Tessina says it can be difficult to begin setting boundaries with adult children when you've spent your life indulging them. If they believe you have no needs of your own, they can grow selfish. If you've hidden your financial stresses, you may feel embarrassed telling them about your money situation.
When you're asked for money, ask for time to consider it. This removes the pressure that may lead you to say yes immediately out of guilt, after which you will be angry with yourself. Discuss the matter with your spouse, and consider the tax implications of a financial gift. The Internal Revenue Service might view a loan as a gift, subjecting it to a gift tax if the amount is more than a certain limit set by the IRS. (Check http://www.irs.gov for current details.) As you consider the request, prepare to approach this as a bank would. Detailed documents prevent argument about payback or debt forgiveness in the event of your death. Your other adult children certainly will be concerned about not only the loan but also how they would handle enforcing a payback during estate management. Financial planners strongly advise talking to a lawyer to draw up loan documents, or you can buy forms at http://www.nolo.com. Detail all payback terms. Sign and notarize the agreement, and have a payback schedule chart. Don't worry about offending your adult child. These are your terms for the loan. He or she can take it or leave it.
If you don't wish to lend money, Tessina advises saying a simple and polite "I'm so sorry, but it's no." After you say no, if your refusal is handled with respect, caring and consideration, your questions may disappear, and you may change your mind, Tessina says.
Tessina and Williams agree that the best way you can help is to assist your child in becoming financially responsible, such as suggesting books or classes. Williams adds, "It may come as words of encouragement that you are confident your child can meet his or her needs and desires."