Are you one of many out there looking after for Mom or Dad, helping them out of debt? One in five Millennials provides financial support to their parents, often by putting their own finances at risk. If you can afford to help your parents financially, here’s the right way to go about it.
The media makes it seem like all Millennials mooch off their parents. But an increasing number of families are finding themselves in the opposite situation. A new study found that one in five Millennials help support their ageing parents.
Half of those giving their parents money was shocked to find out just how much money their parents needed. We naturally assume our parents have saved enough for retirement. But many didn’t, or lost a lot of it during the recession.
Helping out their parents also stops these people from fulfilling their own dreams. Because of the money, they’re loaning (or giving) away:
• 39 percent of Millennials have delayed saving money for retirement
• 48 percent have delayed buying a home
• 38 percent have delayed having children
• 29 percent have put off marriage
If these people keep putting those things off, especially saving for retirement and buying a home, they may find themselves needing financial help when they’re old too. Only they may not have children to borrow from.
Want To Know The Weirdest Part of This Whole Thing?
Only about half of the people supporting their parents have even talked to them about what’s going on! That’s right. Everyone involved — the parents and the children — are so uncomfortable about the situation that they’d prefer not to talk about it at all.
Why are they avoiding the conversations?
- 21 percent said they feel guilty bringing it up.
- 17 percent said their parents are sick, and they don’t want to add to their ill health by having an uncomfortable talk.
- 17 percent said it’s just too weird to talk about.
If you’re supporting your parents (or think you may have to one day), you may have some questions about how to deal with sticky situations that pop up. So we asked an expert for some advice:
You give mom and dad money: Can you dictate how they spend it?
Let’s say you give your mom a few hundred Rands. Because you feel weird about it, you don’t ask her what she plans to spend the money on and just assume it’s for housing or food. Then you overhear her telling your Aunt Mary she lost ten Rand at Bingo the other night. Should you pipe up and say, “What the hell, mom?”
Before any money is loaned, there should be clear expectations about the frequency and amount of the contribution. That could be a time to also talk about how the money is going to be spent. As long as the money is going toward needs, you have to accept that you loaned the money and it is now in your parents’ hands. If you see that irresponsible purchases are being made, you can clarify your expectations for lending the money.
That means you have to talk to them about the money before you give it to them, and regularly thereafter.
Yes, it’s awkward. But if you don’t want to get angry and potentially ruin your relationship with your parents forever, ten minutes of awkwardness will be worth it.
Should your siblings have to chip in, even if your parents only asked you?
Remember that it’s not just the siblings who should be involved in any discussions about your parents’ financial situation. Significant others are part of this too.
A lot of resentment can form between siblings and even the siblings’ spouses if only one child contributes and the others have the means.
If a sibling is just as broke as your parents, he/she can help in other ways. They can take care of the lawn or run errands.
Should you make a plan for repayment, even if it’s unlikely?
You can make a plan to repay the loan but go into the situation knowing that you may not get back any money that you loan. Consider this money gone when you loan it to your parents.
As with any loan, don’t give them more than you can afford. And don’t put off saving for your old age entirely just to help your parents during their golden years.
Your parents will understand. In general, parents don’t want to put their children in a position where they are struggling financially.
Instead, help them develop or revise a budget.
Talk to them about moving to more affordable housing or renegotiating their debt. If worse comes to worst, bankruptcy may be a smart move for older adults with lots of debt.
These conversations aren’t easy or fun. Voices will likely be raised. But if you don’t want to be in their situation when you’re their age, these are must-have conversations.
If you’re supporting your parents, or are concerned you might have to in the future, it’s important to start with clear communication. The conversations can be awkward, but they can save you and your family money, time, and the health of your relationships.
It is never too late to look at debt options speak to a debt counsellor today for advice.
