What to Do When Your Children Are in Financial Debt
Young adults often face financial responsibilities including rent, student loans, credit card payments, medical bills and other obligations. When times get tough, they may approach parents asking for help to climb out of debt. When your children are in financial trouble, you might struggle with overwhelming impulses to bail them out but also not wanting to enable other future financial missteps. Taking time to evaluate options when your children face financial debt helps parents arrive at the right decision.
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Cold Shoulder
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One option for parents with children burdened with financial debt is to allow them to face the reality of their spending mistakes. Adult children who routinely charge unnecessary items to their credit cards, take out car loans for luxury vehicles, request handouts from parents or don't attempt to make ends meet by finding a part-time job and cutting back on spending extras may be overdue for a reality check. You may choose to sit down with children and explain why you don't feel comfortable offering loans or paying down debt as a gift because of their unstable track record. Tough love approaches may sound fine on paper, but be prepared for possible hurt feelings, anger or reproach.
Bail Out
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Some parents feel sympathetic to the challenging economic environment their children face: unemployment, underemployment, staggering student loans and financial temptation can add up to a financial nightmare. If you're emotionally comfortable with the idea of paying off your children's financial debt, either in the form of loans that you expect to be paid back or as a gift, consider your own finances. If your own bank account, mortgage payments and retirement plans seem secure, you may be able to offer financial assistance. If helping your children with their financial debt jeopardizes your own financial situation, steer clear of this option.
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Other Resources
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Some parents aren't comfortable with the idea of ignoring the financial plight of the children; nor do they want to dump potentially thousands of dollars down the drain. Some families may like the idea of supporting children with alternate resources so that they can pay down their own debt. For example, invite children to move back home to reduce housing costs, offer to baby-sit grandchildren to eliminate childcare expenses, or offer to pay for debt management or credit counseling services. Children can then divert saved money into paying down financial debt obligations.
Communication
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Money and finances can be a sensitive subject. Make it a point to talk with your children, offering money or advice without excessive lecturing or resentment. If financial assistance comes with strings attached--for example, reports on job hunting efforts or promises to shred credit cards--be clear on these expectations so that children can decide whether to accept. Also be clear when offering money so that all parties clearly understand whether it's a gift or loan.
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References
- Photo Credit woman with parents image by Pavel Losevsky from Fotolia.com
