It's hard to say no to your children. Whether they're asking for a new toy at the age of three or struggling with paying rent in their twenties, as parents, it's your instinct to give to your children and do what you can to help them. Over the years, I've worked with clients who continue to make gifts to their children well into their 30s and even 40s. While there's nothing wrong with giving to adult children, I find that it's important to point out to my clients that before they start helping their adult children, they should first figure out if they are in a financial position to give and how much they can afford to give without putting their own retirement at jeopardy.
Many unexpected events can happen - you may be helping your adult children now, but in a few years, you might need to help your own aging parents as well. This financial dilemma is particularly prevalent now that people are living longer and health costs continue to rise. I've worked with a couple who made a very good income. They are also extremely generous and gave financially to family members for many years, but are now in a position where they cannot maintain their current lifestyle in retirement.
It's difficult to set expectations once you've already started giving. In my recent conversation with Penelope "Penny" Wang, Editor-at-Large of Money magazine, I highly recommended a clear discussion upfront.
However you pitch in, "set clear expectations upfront -- even put it in writing," says Theresa Wan, a financial planner in Dumont, N.J. Ask: What specific help does she need? If she's living with you, what rent will she pay, and for how long? (You could deposit "rent" into a fund she can use for future costs after she moves out.)
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