From our earliest days most of us were taught to be generous, especially with those closest to us. But ironically, as we enter retirement and confront the need to be more cautious with our own money, our adult kids and grandkids are just coming into the phase of their lives when financial crises seem to pop up on a regular basis. During times of financial need, those we love may turn to Mom and Dad, Grandma and Grandpa for a loan or a handout, and when they do we may want to say yes – but should we?
We found this recent article from USA Today very intriguing in providing an answer to that perplexing question. Written by financial planner Liz Weston, the article makes her view clear from the outset. It’s titled “How to stop being the family ATM and learn to say ‘no.’”
It’s definitely good to be generous with our kids, we would agree – up to a point. But when generosity evolves into what the USA Today article calls “financial enabling,” it has gone too far. Unfortunately, Weston writes, some older adults are guilty of this distorted brand of generosity when it comes to family members. “Financial enabling” Weston writes “means giving money in ways that keep the recipients from taking responsibility and solving their own problems. It may include providing financial support to an able-bodied person who refuses to work, bailing a chronic debtor out of another financial jam or serving as a de facto emergency fund for someone who refuses to save.”
While it’s true that this financial enabling can take place between friends and even between romantic partners, financial planners agree that it seems most common between parents and their adult children. When it involves retirees, financial enabling is a real double edged sword: not only does it harm the one receiving the handout, but it also undermines the financial health of an older parent who’s trying to do the generous thing. “(Financial enabling) can be especially problematic for retirees who may run short of money because of their generosity,” says USA Today.
So next time your adult kids or older grandkids come to you for money, you need to stop and recognize whether your so-called generosity has morphed into financial enabling – and if it has, you need a strategy to say no and stick with it, argues the USA Today article. One psychologist quoted in the piece says that saying no and then giving in after persistent pleading is worse than saying yes in the first place, because by caving into persuasion you’re only increasing the odds that you’ll be a target the next time – the “family ATM” indeed!
So is there a helpful strategy if you feel you’re getting hit up too often for money? USA Today’s Liz Weston writes that it does little good to just tell the freeloaders no, since “few are willing to stop the behavior cold turkey, therapists and planners say.” Instead, here are three questions you might be able to ask to help you decide whether or not to agree to financing your family member’s need.
- First, will this money actually help? Weston writes that “It’s one thing to aid someone who’s been financially responsible but has fallen on hard times. It’s another to give money to people who chronically overspend or under-earn.” You’ll never help them change their bad financial behavior if you keep bailing them out every six months. There are almost certainly larger money management issues at work that will never be solved by your excessive generosity.
- Second, is there a better way to help? “Instead of handing over cash,” the USA Today article suggests, “the rescuer could offer to pay essential expenses such as rent or medical bills if they can afford to do so.” What’s more, any financial help needs to be accompanied with a firm deadline so the beneficiary knows when the assistance will end. We also like the idea of offering to find or pay for financial planning, therapy or coaching for the loved one who is in chronic financial distress.
- Third, how can you make this decision stick? You don’t know how your adult child might respond once they realize they’ve been cut off from your bank account. They may throw “adult temper tantrums,” says Weston, or lay a guilt trip on you or threaten to move away. In the worst cases there may be danger of verbal or even physical abuse. The article suggests you call in outside reinforcements for support if you need to, including an attorney, financial planner or therapist. “You can say, ‘Sorry, I want to help, but my financial planner says it just isn’t possible,’” writes one expert in the USA Today Whoever it may be, you need someone who will act as your advocate to let your loved one know you mean business.
Here at AgingOptions we have a strong recommendation for you: no matter what your family circumstances, we urge you to contact us and arrange for a family conference, under the guidance of one of our staff professionals. By having this type of organized, comprehensive family conversation early on, you can nip many problems in the bud, getting everyone on the same page when it comes to your needs and expectations – and their responsibilities – as you age. And if necessary, this gives our staff the chance to spell out for your adult children that your financial needs in retirement are of paramount importance, and you can’t afford to be bankrolling their bad spending habits. Contact us soon and let us discuss the benefits of a family conference. It could be the most important retirement decision you’ll ever make.
And for a broader review of a full range of retirement planning strategies, we invite you to come join us at an AgingOptions LifePlanning Seminar. You’ll discover the benefits of the comprehensive approach to retirement that we call LifePlanning, blending financial, legal, housing, medical and family issues and plans into one seamless blueprint. A LifePlan from AgingOptions is your key to the retirement you’ve dreamed about. Click here for details and online registration, and then register for the free seminar of your choice. Or if you prefer, call us for details and assistance during the week. We’ll look forward to meeting you soon!
(originally reported at www.usatoday.com)