My adult child needs money.

My adult child needs money.  Should I help?

There is no clear cut answer

If you don’t have much money yourself, my answer would be no.  As a general rule, you shouldn’t sacrifice your financial security to meet your adult child’s needs, unless you are sure you will have the time, resources, and health to make up the deficit and provide for your own retirement.

I met a woman with limited resources once, who took on a big mortgage to buy a corner grocery store for her son. The logic was that her son would have a guaranteed job, and the two of them could live upstairs.

It seemed to me that this lady’s desire to help her son was clouding her ability to see her plan objectively. The idea was risky for a number of reasons, but, driven by her desire for a solution to her son’s unemployment, she went ahead – without answering some fundamental questions.

Her son was inexperienced: What if he found that he didn’t like self-employment?  Even if he enjoyed the work, how successful are corner stores nowadays?  Running a small store requires long hours. What if he didn’t have the commitment or stamina to keep going? What if the store got robbed?  What would happen to their living arrangement if her son wanted a girlfriend or a wife to share the apartment?

I wished them success and sincerely hoped they could beat the odds, but as a professional planner, I recognized the potential for problems. There were too many unknowns, a dangerous lack of flexibility and too few resources.

On the other hand, people who enjoy more than adequate financial resources need to consider whether they are actually helping their children when they think about providing financial support.  I watched a show on television the other day about a Mom who let her 24-year old daughter live rent-free at home. She also paid for her daughter’s groceries, cell phone, and other living expenses.  By the end of the show, it was obvious that Mom was not helping her daughter.  The daughter needed to grow up and learn to take care of herself.

When considering your child’s future, it’s important to ask yourself whether you are really helping when you ‘help out’- or are you actually reinforcing an attitude of entitlement and learned helplessness.

If you do decide to help, consider the extent to which you are taking away your child’s opportunity and motivation to discover his or her own ability to create personal and financial success. (Doesn’t parenting ever end?!)

In a scenario where your adult children are working hard, struggling with mortgage payments, retirement savings and RESPs for their own children, and you are clearly in a position to help: Why not?  Your generosity would probably be greatly appreciated. You would also have the pleasure of seeing the impact of your gift now, when it’s really important. After you are gone they may no longer need your money (assuming you are able to leave an inheritance).So again, the answer is not clear cut.  Each situation is different. The point is that your decision requires a lot of careful thought and consideration, along with your love and generosity.

This article was prepared solely by Laura Chanin who is a registered representative of HollisWealthTM (a division of Scotia Capital Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada). The views and opinions, including any recommendations, expressed in this article are those of Laura Chanin alone and not those of HollisWealth. 
TM Trademark of The Bank of Nova Scotia, used under license.

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