When Your Parents Need Financial Help From You
The tables have turned and your parents need financial help from you. Should you say yes?
When the tables turn and your parents ask you for financial assistance, you might say yes without a second thought.
- It’s not easy to lend anyone money, especially your parents.
- Giving your parents money might solve some short-term problems but it won't help them in the long run.
- Consider setting up a budget or helping out with specific bills if you don’t want to lend money.
If your parents ever ask you for financial help, you'll probably think back to every time they lent you money when you were younger. Or when they bought your kids something they really wanted, even if they didn’t always have the cash on hand. Or the times they paid for things you needed, like clothes, food, and a roof over your head.
When the tables turn and your parents ask you for financial assistance, you might want to say yes without a second thought. But is it the right decision for you and your family?
Here’s what to do if your parents ask you for money.
Figure out why they’re asking
Some parents might have lost a job or ended up with an unexpected expense that they can’t afford, like a medical bill or car repair. However, some parents might be notoriously terrible with money and are asking you for help. Before writing a check, consider asking them a few key questions to start, like:
- What do you need it for?
- How did you get to this point?
- Is there anything else that’s financially pressing you’re putting off?
Even if you think they have good intentions, try to get as many details as possible around what your parents need the money for. Poor and unhealthy spending habits might lead you to become resentful of giving them money in the future. On the other hand, a parent who previously had healthy money management skills and is now suddenly struggling with finances could also be showing early warning signs of dementia and Alzheimer’s disease. It’s important to get as much context as possible surrounding their request.
Review your income
If you have the money to spare, you might think about handing over the cash with no questions asked. But even with some disposable income on hand, you’ll need to make sure you’re comfortable with giving your parents money, even as a loan. Because as with any loan, there's always the possibility you might not get it back.
Take the time to go over your finances and review your budget. Based on the amount they’re asking for, you might take a bit of a hit on anything from saving for retirement to paying off debt. Only make this jump if you have the spare cash to do so.
Talk it over
Lending money to someone is a big deal, even if it’s your parents. To that end, talk over the proposed details with your partner (or your accountant) to get their input. If they struggle to accept the idea or don’t think you can reasonably afford it, you might want to find other ways to help or reduce how much money you give your parents.
A parent who previously had healthy money management skills suddenly struggling with finances could also be showing early warning signs of dementia and Alzheimer’s disease. It’s important to get as much context as possible surrounding their request.
Set up a repayment plan
While it might be a very emotional decision for all of you, that doesn’t mean you avoid the financial implications of the loan. If you agree to lend your parents money, treat it like a business deal. Ask them when they think they can realistically pay it back in full or make a reasonable repayment plan. Their income and expenses might dictate how much they can pay you back and when which is OK. Just make sure you’re all comfortable with a repayment plan. Also, be mentally and fiscally prepared for the possibility that they don’t pay you back.
Keep the discussion going
Your parents might have come to you in an emergency and don’t expect to ask you for money again anytime soon. But don’t assume that their needs are over and done with. Keep talking to them about their income and where their money goes. Learn their spending habits. If necessary, review their expenses. Even though money is still a taboo topic — especially among older generations — try to get them comfortable talking about finances with you.
Help in other ways
While giving cash is an easy way to help, it might not always be the most efficient or feasible — at least for you. Aside from giving your parents money, there are other ways you can help them out. For instance:
Pay for a few meals or take them grocery shopping. If you don’t live with your parents, this is a great excuse to hang out with them regularly. You may not have to adjust your budget too much to incorporate this new expense.
Add their phones to your plan. Adding lines to your cell phone plan will cost you a little extra and save them a lot. It’ll also give you peace of mind that their phone will never get shut off from them missing a bill.
Take them to appointments and errands. If your parents need a ride somewhere, try to fit it into your schedule. If you work for yourself or from home, you might have a little bit more flexibility with this. If you can, work their errands around your typical day and week.
Create or update their budget. Even minor financial changes can have a significant impact on your parents’ financial well-being. Sit down with them and review their budget. Go over their income and expenses to see where they can earn more and cut out unnecessary spending.
Develop a financial plan. While you might not be the right person for the job, you can give your parents the tools they need to get and stay on the right track. Help them find a financial planner and, if necessary, an estate planner or eldercare financial planner. Getting the right team in order and setting up a long-term life plan could mean fewer times they ask you for money.
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About the Author
Dori Zinn has been covering personal finance for more than a decade. Her work as been featured in The New York Times, Forbes, Yahoo!, CNET, and more. She covers credit, debt, budgeting, investing, college affordability and other topics to help people learn about money.