September 2011 Volume 31, Number 9


At the request of a client, I've updated an article I wrote in 2006.

I seem to be taking on an added role as financial advisor — that of defender of my clients' retirement funds. I'm not fighting off thieves or con men or shady pitchmen. I'm stepping in to protect my clients from their own adult children! The problem is growing and unfortunately it reflects a widespread trend in America.

Many middle-aged and younger consumers are addicted to credit and need to check into rehab. Consumer credit-card debt has almost tripled over the last two decades-from $238 billion in 1989 to over $800 billion in 2011.1 The average American family now owes more than $6,700 in credit card debt.2

A few years ago, I met with a client whose adult children were asking her for money. She felt uneasy about the situation and had come to me for advice. I asked her, "When you were their age, what did you do when you needed something and you didn't have the money for it?" "Well," she said quietly, "we did without." I asked another question. "And what if it was something you really needed?" She thought for a minute and then said, "We would figure out a way to pay for it by doing extra work and saving up for it, or by giving up something else…" I kept pressing. "Did you ever ask someone else to pay for it-including your parents?" She became indignant, "Of course not!" (There's the lesson for her children.)

Problems compounded by unemployment or divorce. The problems with debt and a low savings rate are compounded when a wage-earner loses his or her job. There is little if any "cushion" to fall back on. Contributions to savings are halted, debt in- creases, and mom and dad become the banker of choice. One of my clients made house payments for his middle-aged son who was out of work. "This was supposed to be temporary financial assistance," said my client. "But the months kept rolling by. This began to put a strain on my relationship with my son and his family. I kept wondering why my son wouldn't go out and just get a job-anything that would put food on the table. That's what I would have done! But he kept holding out for the specific job that he was trained to do. I finally had to say that I couldn't support him anymore. Now I feel like the bad guy!"

Today, greater numbers of adult children are moving back in with their parents after becoming unemployed or divorced. Often this involves three generations living under the same roof and parents generally end up paying for the additional expenses incurred. Although parental support is invaluable during this difficult time, it is important that parents do not assume responsibilities that belong to their adult children. Here are principles you can adapt to your own personal situation.

Principle #1: Love is not tied to money.

Adult children may sometimes manipulate their parents' emotions by associating money with love. (i.e. the more you give me the more you love me). Worse, some children really believe it. Never confuse money with love and don't allow your family to do so either.

If they try this trick, reverse the tables. Tell them you have raised them and supported them all through their growing years. Ask if you should measure your child's love for you by how much they are willing to support you in your later years.

Principle #2: Empower, don't enable.

This is the concept of "Give a child a fish and you feed him for a day. Teach him to fish and you feed him for a lifetime." Family therapist Gary Lundberg describes a couple whose son has recently become divorced and unemployed and who wants to return home to live with them. The parents want to help their son, but they also want to establish boundaries in order to avoid future conflict and so they set up these simple rules:

  1. Keep all your belongings in your room.
  2. Spend time each weekday looking for a job, and help out with chores around the house after that.
  3. Do you own laundry/clean up messes.
  4. Be ready to move out in six months or sooner.

Lundberg says the couple explained the boundaries in a kind way and they also talked with their son. On one occasion, he opened up by saying, "I really messed up. I wish I had been a better husband. I don't know what I'm going to do."

The parents validated their sons' feelings by saying, "What you're going through has got to be very difficult. What are you going to do?" The son then talked about what he could have done differently and what he was going to do about his life now. In the years that followed, the parents were grateful they did not try to solve their son's problems (something they didn't have the power to do anyway)-but they helped empower him by listening (instead of the impulse to give advice) and allowing him to solve his own problems. Too often well-meaning parents enable their adult children to become dependent for financial and emotional support by always providing advice and money when things go wrong. The parents in the above example showed great restraint in not giving advice. They would later say, "Knowing we don't have to solve our son's problems has taken a tremendous load off our shoulders."

Principle #3: You are responsible for your own financial security

This is directed at both parents and children. Parents must give first priority to their own financial security. Your retirement funds represent a lifetime of sacrifice and saving and investing. These funds must be off-limits to your children. If you use your own resources to bail out your adult children, I can almost guarantee that this won't solve their problems-it will only prolong them. Experience has shown me that the cause of the problem (excessive spending, inability to keep a job, laziness, etc.) doesn't change until a person is sufficiently motivated to change themselves. If you solve their problem for them, it will likely be repeated until they solve the problem through their own efforts.

Principle #4: Be an example of generosity.

I know this sounds counter-intuitive after I have just written about safeguarding your money! But one of the best cures for selfishness in children is to get them involved in helping others who are less fortunate.

Let your children participate with you in doing charitable work. We like to adopt a family each Christmas and our children and grandchildren have been wonderful to help with the shopping and delivery of food and gifts. Sometimes our adult kids have made us aware of individuals who could use assistance during a difficult situation, and we have been happy to help out. We also like to "treat" our own kids by paying for airfare for family reunions, or surprising them with something when it is not expected.

The bottom line is that when dealing with adult children, your job is to reinforce fiscal and family responsibility. Let your children make mistakes--and to learn from their mistakes. You can give them a heart full of love and a listening ear. You can give them encouragement and support. And most of all, help them develop self-respect and dignity. If that doesn't work, I know a financial planner that will fight in your behalf…


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