Bank of Mom and Dad’s Finance: When to Say No to Your Children

11 Apr Bank of Mom and Dad’s Finance: When to Say No to Your Children

I discuss financial problems with people everyday. I usually ask people to give me a little history–how did they get to the point of needing to discuss bankruptcy? Some of the answers wouldn’t surprise you–job loss, medical bills, divorce. But it might surprise you how frequently I hear a story that involves financial help to adult children, that ultimately leads to bankruptcy.

Parents struggle with saying “no” to their children almost from day one. How long do you let your baby cry in her crib before you pick her up? How long do you linger at the preschool door when your toddler is crying “don’t leave, Mommy.” From toys to treats to clothes and shoes, we go on trying to strike the right balance, between giving enough and spoiling them rotten. It isn’t easy. In my own household, every time I say “no,” it is an invitation to a negotiation, and my daughter is a really tough negotiator. Seriously, union bosses should be so persistent. And it only gets harder as they get older, and the decisions are about cars and college, student loans and first homes.

So how do you know how much financial help to grown children is too much? That depends on many factors, including how much retirement savings you have, and whether you are considering a gift (or a loan you know won’t actually be paid back), a loan, financing for your child, or co-signing a loan. Whatever the circumstances, though, you should approach that decision the same way you would (or should) approach taking out a loan, or refinancing your mortgage. What is your child’s history with credit? Are you helping a child stretch her wings for the first time, or rescuing a child who has gotten in trouble with credit before? Are you seeing signs of change, of responsibility undertaken, or are you just reflexively running to the rescue of a child who is in perpetual need of rescue?

I once represented a woman whose house was in foreclosure. A Chapter 13 case can usually help with that, but this woman was in her 80s, and I was concerned about the feasibility of a five-year payment plan for someone in her situation. It turned out that she was supporting several grown children who lived with her, and was trying to save the home so they would have a place to live. But the mortgage on the house was far in excess of the property value. So I asked her what did she think would happen to the house when she was no longer around to make the payments. From her reaction, it was apparent that the question had never occurred to her before.

Sometimes the kindest thing we can do for our children is to say “no.” And while most parents have the instinctive need to help, to try to fix things, the greatest gift we give our children is to teach them to fix it themselves. Offer a hand up, but not a handout; give them enough help to set them straight, but not so much that they fail to launch. I know, it’s a hard balance to strike. Sometimes you miss the mark, miscalculate, and need a bankruptcy to set yourself straight. It happens. Sometimes it’s the kids who need to file bankruptcy, make a fresh start, and leave you with the ability to help in a real crisis, without exhausting your resources to cover everyday expenses.

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