It’s a noble thing to want to help out when family members are in financial need. But is it the right thing? And is there a way to broach the subject and offer assistance without making the beneficiary – or you – feel awkward or embarrassed? Because this topic affects so many people (more than 4 in 10, according to one source), we thought it might be helpful to bring you this recent article from the Money magazine website in which reporter Anna Lucia Murillo answers those very questions. Let’s take a look to see whether her approach might help you assist your loved ones and maintain a healthy relationship at the same time.

Middle-Aged Adults Are Supporting their Kids – and Their Parents

“It’s a familiar worry,” Murillo writes: “is everyone in my family financially provided for? Is there anything I can do for them?”  The fact is, this desire to help may be much more common than most people realize. In January of 2020, AARP published a report revealing that over 40 percent of middle-aged adults expected to give their parents some financial help in the year ahead. Even more anticipated helping out their adult children. 

Murillo spoke with Washington, D.C. wealth advisor Sefa Mawuli who said she sees this first-hand. Mawuli told Money that a high percentage of her clients have done well in technology and other industries, but many of them come from poorer backgrounds. They feel an obligation to help family members financially — and wonder whether they can afford to do so. “It’s very, very common,” Mawuli says.

Family Support Involves Significant Sums, says AARP

According to the AARP survey, for many middle-aged adults, the pressure of helping both aging parents and adult children “creates a financial strain on their own family finances and places particular pressure on retirement savings during a crucial point for building wealth.” Nevertheless, the data show that the money given to parents and adult kids makes a huge difference. “This money is used most often to buy food, with groceries topping the list for aging parents as well as adult children.” Other needs that family gifts help meet include medical and transportation expenses and utility bills. In other words, says AARP, the money rarely goes toward vacations and other luxuries. 

How much money does the average family provide? The amount of giving is significant. The AARP survey found that over half of respondents – 54 percent – have given $1,000 or more to a parent in the last 12 months, and 20 percent have provided $5,000 or more. “Financial support to adult children was equally striking, with 56 percent of midlife adults having provided $1,000 or more in the last year and 25 percent having contributed $5,000 or more,” says the AARP report. 

Deciding If You Can Afford to Give 

According to a recent study from the Employee Benefit Research Institute (EBRI), a significant number of Americans say that providing financial help to family members is more important than saving for their own retirement. When asked if they agree with the statement, “It is more important to help friends and family now than to save for your own retirement,” 40 percent said they agree “strongly” or “somewhat.”   Responses showed differences between ethnic and socioeconomic groups: for example, nearly half of Hispanic workers said it was more important to help family and friends. Lower income households also tended to place family ahead of retirement savings. 

“However,” says the Money article, “experts warn that putting the financial well-being of others ahead of your own can backfire.” As one online financial advisor told Murillo, “A broke person can’t help another broke person.”  Balancing personal and family needs becomes a highly personal decision. 

The Money article strongly suggests that we all need to provide for our own basics first. That means we can meet all our own expenses and build up sufficient emergency savings to cover living costs for a minimum of three months. Then, says Money, “see how much money you have left over and decide how you can help. There are a lot of ways you can give support, from helping with bills to acting as an informal line of credit. But only use money that you can afford to give away.” It’s also generally advised that you should never take on debt for another person by co-signing or otherwise obligating yourself for their poor decisions or inability to pay.

After Establishing the Basics, it’s Time for a Conversation

According to the financial advisors interviewed for the Money article, how you approach a family member depends on how comfortable they (and you) feel discussing money, and specifically money problems. The most “hands-off approach” involves setting aside a predetermined amount in a family emergency fund without telling your loved ones about it in advance, so those dollars are ready when the need arises. 

“The other end of the spectrum,” Murillo writes, “is having a conversation with your mom, dad, son, sibling or other relative where you ask them what they need help with and come up with a plan together. Maybe this results in you consistently paying a bill for them that they were struggling to make.”  Ideally, one planner said, you and your loved one would have this conversation along with a financial advisor, so “you have an objective third-party present when the inevitable hard feelings show up.” 

If you plan to offer regular support – a monthly amount, for example – make sure you and your family member review the arrangement periodically. Another idea from the Money article is to set up a shared account so your family member can access cash when they need it to help them meet expenses. This helps prevent strained conversations, because the funds are readily available.

Assisting Financially Isn’t the Only Way to Help

The Money article ends with an important question: what if you’ve done the math and you just don’t have the means to provide financial support? That’s okay, says Murillo. “Working on your own financial well-being is important, too. Securing your own emergency savings and getting on track for retirement will actually help your family in the long run, setting you up to give more if and when you can afford it and helping to break the cycle of scarcity.” 

There are other ways to help a family member in need. Depending on your circumstances, you might consider a joint living arrangement with your parents, since multi-generational housing can be a great way to save. On the other end of the age scale, perhaps you can help adult kids or grandkids save on sky-high costs of child care by offering to watch the little ones on a regular basis for free. 

Finally, sharing information can be the biggest help of all. If you have a financial planner you trust, see if he or she will meet with your family member in distress, with you covering the cost. This would be the perfect time for you and your loved ones to work with a financial adviser to create a financial dashboard. It’s a tool that, when properly used, can guide your whole family out of the rough financial waters and ensure smooth sailing. If you want to learn more, contact us here at AgingOptions and we’ll gladly refer you to a trusted adviser who can work with you. 

The bottom line on assisting family members financially? No matter how you decide how to do it,” says Money, “your goal should be to get ahead of any emergencies and be proactive instead of reactive.” We agree completely.

My Life, My Plan, My Way: Get Started on the Path to Retirement Success

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The best way we know of to successfully blend all these elements together – finance, medical, housing, legal and family – is with a LifePlan from AgingOptions. Thousands of people have discovered the power of LifePlanning and we encourage you to the same. Simply visit our website and discover a world of retirement planning resources.  Make certain your retirement planning is truly comprehensive and complete with an AgingOptions LifePlan.  Age on! 

(originally reported at https://money.com)