Bailing Out Your Adult Children

I recently came across a survey conducted by Harris Interactive who questioned non-student adults aged 18 to 39 and their parents.  I admit, the survey was done in the U.S. but could Canadian results be similar?  I found the results to be quite a shock.

Six out of ten parents provide or have at one time provided financial help to their adult children in some of the following ways:

  • 50% provided a place to live
  • 48% helped out with expenses
  • 29% give their adult children spending money
  • 28% pay their medical expenses
  • 19% make emergency deposits to their children’s chequing account
  • 16% help pay back loans or credit card debt
  • 7% help with, or provide the entire down payment for a home
  • 6% provide some other type of assistance

Many of those helped felt that life is financially tougher for their generation and many parents agreed.  What is alarming is that one in four parents took on extra debt to help their kids and 7% delayed their own retirement.

It’s easy to condemn.  Sometimes financial aid is a one time boost that kids need to get on, or back on track.  Other times it can create a cycle of dependency that’s impossible to stop.

I come from a family that believed in paying our own way, saving and not buying anything we can’t afford.  I admit to not being perfect – I have bought things I can’t afford, it’s called credit.

I’ve also gone through some difficult times, but I wouldn’t have dreamt of asking my parents for financial assistance.  Not only would I not get it, I’d probably have years of lectures on financial responsibility to look forward to.  That thought alone would keep me eating Kraft Dinner until things got better again.

Is life really financially harder for the above age group?  I find that they generally are better educated, have better jobs and earn a lot more income than I ever have.  Or is it because they have an “all about me attitude” that doesn’t handle the realities of life very well?

What do you think?

23 Responses to Bailing Out Your Adult Children

  1. Unless there is a dire emergency, I would suggest that parents don’t bail out kids with continuous financial support.

    I can see a parent offer spot help for very specific situations, but giving spending money to their children isn’t the best help they can offer.

    • I agree with you completely Elle.

      I have a friend my age (47) who still lives with his parents. He honestly doesn’t think he can afford to move out, because he is so used to them providing for him.

  2. When do you consider the line crossed between helping out and bailing out? My parents sold us a great car at a price a couple of thousand dollars below what they could have gotten on the open market. My dad gave us a laptop that he didn’t use anymore but that was still good enough to probably grab a couple hundred dollars had he decided to sell it. They did this to help us out, but clearly we benefited from it. I don’t look at us as having gotten bailed out, but I wonder at what point that line gets crossed.

    • @Money Beagle: I would not consider selling your children personal possessions that you don’t use any more at a reduced price to be a bail out. It’s probably a win-win for both as the hassle of putting an item up for sale can sometimes outweigh the extra dollars.
      My husband sold his car to our oldest son when he started university for a lot less than he could have got advertising it, but we knew it was a reliable vehicle which he may not have got otherwise for the same money. Likewise I’m getting some cool stuff from my own parents as they are getting ready to move.
      The line gets crossed when a parent is continuously helping out their child when the child should know better.

  3. Really interesting post topic!

    I think that it is harder for my generation than it was for my parents & your generation. It seemed easier for one parent to stay home and raise the kids, while the other worked full time. Although my parents weren’t able to do this, many families were able to put food on the table and pay the mortgage. Nowadays, I think many cannot do this. I believe costs of living have increased much more than incomes, and decent paying jobs are much harder to come by. Many manufacturing and certain professional jobs have disappeared. There appears to be more responsibilities placed on my generation that have to be dealt with at a younger age (defined contribution plans, environmental issues, health, etc). There also seems to be less perks and taxes, fees, restrictions, limitations, blackout periods, etc.

    To see the actual numbers and categories of financial help that parents have provided to adult children is quite eye popping, but I can’t say that I’m surprised. I see more and more many adults in my generation and young adults in the generation after mine, spend like drunken sailors. They are spending their own money, and even worse their parents money. Many aged 17-35 today are already driving luxury cars (BMW, Audi, MB, and even Porsche) when they cannot truly afford them (high debt levels). My generation has also been purchasing $500k+ homes as their first home, with huge mortgages!

    Life is harder, and we are better educated, but it is true that the “all about me” attitude cannot handle the realities of life well. The attitude also ignores the unpleasant realities of life as well. My generation is less responsible, and lives for today (extreme opposite of your generation). I don’t think my generation’s consumer centric approach to life helps either. Unlike your generation, mine does not seem willing to sacrifice first, before seeking assistance. There is a general sense of entitlement.

    I personally have gone through difficult times but have not asked for help, as I still believe that people should learn to stand on their own two feet, which involves learning how to prioritize, sacrifice, and survive, before indulging in ones own personal wants. I think its okay to ask for help, but only if they have shown they’ve done something to contribute as well (giving up something, etc) before recieving it. I also believe in a more balanced approach to life where one should enjoy the little things in life as well, rather than delaying everything (like my parents) or indulging in everything (like my generation).

    I think parents should help, only if their children will learn something from it. But if their attitude doesn’t change, then what is going to stop them from asking again and again…. like Greece.

    I’m still wondering….what went wrong during my generation that has made most people they way they are now? The generation after mine is even more baffling ….ask them what the financial crisis of 2007 was and you’ll be shocked with a lot of the clueless expressions!

    Great post!

    • @The Investment Blogger: I agree that cost of living has increased more than income and most families need two incomes to get by. I don’t agree that there were more perks when I was a young adult – no RRSPs, TFSA’s, various tax credits available now, even investment opportunities for small investors, etc.
      When I moved out of my parents home virtually all my belongings were second hand and I did without a lot of things I would have liked to have. Our first house was a townhouse condo that we lived in for several years. We didn’t have expensive furniture, electronics, cars, vacations or the big dream home. This was something we worked towards rather than expecting them immediately.

    • I have 3 adult stepkids ranging from age 32-38. Over the last decade my husband and I have helped out financially several times with all of them. The last few years we stopped. I think there is a thin line between help and enabling and our lines definitely started to blur. For one thing when adult kids begin to feel entitled to or expect help because they want to spend their money on something fun and do not have anything left over for a bill or a car repair, that can become problematic. Sure as a parent you want to “help” but you also have to wonder is this money really helping or is this another band-aid trying to cover a huge gaping wound? Point in case, if 38 year old step daughter does not have a job and her husband has a bad job, they have 4 kids but also designer clothes, Ipad 2 and 7 flatscreen TV sets, where is the money going? It is hard to send someone money for groceries if they do not want to make any sacrifices in their own lives but expect you to. In other words, where do wants come before needs? When i was on my own i did without a lot of things, as parents we almost feel guilty if we tell our adult-kids that maybe they do not need the IPhone or a brand new car.

  4. The example that stands out for me the most is:

    - 29% give their adult children spending money

    I’ve seen this happen with friends my age, they still have access to Daddy’s credit card and are routinely given money to spend on luxury items.

    I completely understand the one-time bail out to help your child out of a jam, but the continuous financial aid doesn’t make sense to me.

    Maybe it’s just how I was raised ;)

  5. Helping your children is what parents do, however this sounds a lot like enabling. Helping is temporary not ongoing! It should relieve the children from acting responsibly.

    • @Elle Marinez
      @Krantcents
      @retirebyforty
      I see nothing wrong with helping out your child with a temporary place to live, money for an emergency, or any one time expense. I also see nothing wrong with giving your children money as gifts if you can afford it – why wait until the will is read?
      My problem with this survey is the continuous handouts, especially if the parents are going into debt themselves or experiencing any other hardships as a result.

  6. These stats are crazy for me too guys. I am a young adult (23) who would never dream of asking my parents for spending money or any sort of handout. In fact, I have honestly told them that within the next few years they should look at taking out a small HELOC on the house if they want the money to travel. Dad is 59, mom 52, and both are workaholics who I am quite sure will always work in some capacity. They have never really had any debt in their lives. They helped my brother and I get through school (we also worked 50+ hours a week during the summer) by efficiently putting money in RESPs for us and I was able to graduate debt-free. When I graduated this past year they helped me out on a down payment for my house which I paid back with my first three pay cheques (faster than our agreed upon time frame). My parents raised me, spoiled me, made sure I didn’t start my adult life with thousands of dollars in student debt, I would say there job is more than done (kind of an intimidating act to follow to be honest). The last thing I would ever do is say, “Gee guys I’m a little short this month, think I could get some play money?” They love to travel and do lots of it, so I want them to reward themselves after years of hard work, as opposed to worrying about an inheritance for my brother and I or helping us buy shiny new consumer goods!

  7. 18-39 eh?

    Well, after University i’d racked up about $1200 in CC debt and forgot to change the billing address. By the time the collectors called it was pay or death (so it seemed).

    So Mom paid that (and i’ve been trying to pay it back since, with NO LUCK).

    After a few years in Alberta, realizing my university degree was leading to a crappy call centre job @ TELUS and/or TransAlta I went back to school in my home town, and Mom footed the housing / food bill. We’ve been TRYING to talk to her about helping her out in retirement, to no avail. As long as I worked, paid my own tuition, books and spending money (read: I worked thru 3 yrs of college).

    I think there is a BIG difference between helping kids out an supporting them. And i’ll be damned if I can’t pay for something for Mom down the line – be it a vacation to Europe for a month – or a new car when hers finally dies. But I didn’t “ask” for a hand out – it was offered, and from my perspective it will be paid back in full, with interest – and most importantly – forever gratitude.

  8. @Sustainable PF: Everyone’s situation is different – kids and parents. I claim there’s nothing wrong with helping out as long as 1)it’s not facilitating irresponsible behaviour and 2)the parent is not neglecting their own needs. I have friends who regularly buy things for their kids – from vacations to home renos. They can afford it and say “what else would I spend my money on?” Like I mentioned in my post, there’s no point in waiting until the will is read.

  9. I hate to admit it, but I fall into the ‘helped’ category… When I was 35 my ex and I came to the conclusion that divorce was our only option. We decided to sell the house but it needed some serious work so I moved out with our daughter so he could get everything done. If my parents hadn’t offered me the guest bedroom then I don’t know where I would have ended up! I was still paying mortgage, utitilities and debt repayments, leaving me with less than $500/month – of which $300 I was giving to my parents to help with food and the added expenses of us staying there.

    It was a one time only deal and my god it hurt to have to ask, but if you can’t ask for help from your parents, who can you ask? Though I really don’t recommend sharing a bed with a five year old for three months, they kick! lol

  10. I am part of this age group. Amongst my group of friends, we’re all over the map – some of us are very fiscally responsible, and some ran up debt on stupid stuff (eating out, way too many books, etc.) Easy access to credit is a big temptation, and it gets a lot of people. Frankly, I love hand me downs -it’s how I got most of my furniture!

  11. It appears to me that aside from the economy, we find people regardless of age that believe they are not really responsible or accountable to themselves.

    The media blasts the airwaves with all sorts of narcissistic stories and advertising to encourage people to think living in that world/life is normal.

    Shows that cater to people with an easy way in life are not accurate but yet encourage the viewers to purchase homes that are far beyond their financial means, travel to the South of France for holiday and eat at expensive and unique places while consuming wine from regions we have no idea existed.

    The informed consumer who understands the value of a dollar and appreciates life and family/friends who is willing to go to the park, see/rent a discount movie or something that is not expensive can do very well.

    Keep the ego in check…

  12. I came from the same generation and I would have never asked my parents for financial help. I always figured if made the mess then I should clean it up. When I was younger I ate ramen noodle soup for weeks, I worked 2 and even 3 jobs and did without all the things my friends had so I could pay my own bills. I had to do without many things when I was a divorced mom raising 2 children by myself. Having said that… I have helped my now 23 year old, single daughter out a few times with the strict agreement she is to pay me back, and SHE DOES!!! I do not want to create a problem for her by making everything “ok” and her not having to work for it or cause any undue stress on our relationship. If you keep bailing them out how will they learn to grow up and become responsible for their own poor judgment and mistakes? Help is help, but when it happens over and over and over again you have created a monster.

  13. A lot of these comments, and the initial post, imply that this assistance is because of financial mistakes. I’m sure a lot of them are, but there’s also probably a lot of overlap between the assistance for medical expenses, other expenses, and housing. I know several people who came down with serious illnesses during college and were, as a result, unable to obtain jobs immediately after college. Living with their parents, and/or obtaining financial assistance for living expenses as well as medical expenses, while they recovered from their illnesses was the best way that they could recover quickly and get to the point where they could get a job.

    • This is a very sad story Spending Mom.

      You are doing the right thing by cutting off your son. I know it’s hard, but he has to learn at some point and he won’t as long as you keep bailing him out. The fact that he is rude and doesn’t appreciate your help is a big problem.

      Stay strong and you will be doing him a big favor. You will force him to finally grow up and act like an adult.

  14. I recognize what you write.

    I am now in the process of stopping my enabling behavior, it seems my son will never speak to me again. But it has come so far, that it be it.

    I have all her life tried to make sure he had everything, and lacked nothing. But as I realize I have really messed up.

    He only calls me when he needs money, and is rude to me and unapprisiative other wise. He does not say thank you, or show any gratitue what so ever. She seems to think she is entitled to the money she gets.

    We have now had a huge fight and he calls me a liar and a bitch.

    It is easy, I can document all my payments to hin, cause they are available in my bank online. I also sent him a copy of our sms dialoge, where he asks me for money, I send him a happy message that I have transferred the money, usually with a smiley, and then I do not even get a thanks. Next sms is when he needs soemthing from me again. Usually money.

    I have now said he will not starve, and that he is welcome for dinner every day, but I will nor transfer more money to him. I smiply can not afford to.

    It all probably started because I have hin pocket money without him having to work for them. The deal was for him to do chores, but they were never done and I threatened to not give him his money then, but when he missed out of activities with friends and classmates, I bailed him out.

    First I paied for a private school in law, while he lived at home, and all books. He never studied ot went to classes. But of cause I had to pay, or at least did pay. I realise now that was a mistake.

    When he moved away from home to study, he spent all his student loan on a new fancy computer. I was furious. I told him I would not bail him out. But ended paying his rent and food for months. Nothing more, he had no money for fun, only food and rent. I thought this would teach him. But he ended up gaming all nights, and failed his exam. I don’t think he even showed up.

    This gave him a loan he has to pay, and I have not paid this.

    After studies he moved home for a while, and did not help with anything, ever. That made me resent him, and look forward to him move out again, so I helped him get a flat.

    He paid most of the rents, but constantly had to borrow money and I paid a few rents. I the end over a period of 1-2 years he owned me 15.000 dollars. I realized he would never be able to pay that and said we could start with a clean slate. I erased the debt, but from now on he would have to repay everything he borrowed.

    I have gradually given him less and less, but it has been a process over years. Again and again I have told him no more, but then I cave in. My own stupidity, I realize now, and need to help.

    My son now has a job where he makes 100.000 dollars pr year. He recently called me to guaranty for a loan on 50.000 dollars to cover his credit card debt. He lives alone in a small flat that he can afford. He has all the fancy technical stuff you can imagine, computers, flat screens, projectors, fancy new furniture, iPads, newest iPhone, etc. etc. He doesn’t cook at home but eats out, and order home delivery every night. He only wears expensive brands in clothing. He lives like a king. Again and again I have raised my concerns with his life style and credit card use with him. But he ignores my, and when he buys new stuff tells me all about it, then I tell him how silly it is, and that he is about to get into serious credit trouble, and he laughs.

    I have out of selfish interest, helped him out again and again. Just because I am afraid that if he is evicted he will move back home, and I really don’t want that, because there is so much conflict and he doesn’t help with anything at all and just behaves very badly. He doesn’t even clean the room he borrows, which quickly becomes disgusting, with food leftovers etc. When he moved out the last time, after living there for one year, we had to seriously wash down and repaint the room.

    Well for the last 6 months, he has borrowed, little here and there, but when I sum it up, it adds up to about 4000 dollars, and I am not wealthy. I work hard and save money. And I cannot afford tings I would like, because I am always bailing him out. A few months ago he asked for rent again. I had to borrow money form the bank to help him. He promised dearly to pay back. He got the money but I never got anything back. I then asked if he could make down payments. Not even an answer. I between I have borrowed him some money here and there. Not even a thank you.

    Now he asked me to cosign a loan for him to cover his credit card dept. First I automatically said yes. I later told him no. I cannot risk it. I will lose my own flat if he does not pay, and I don’t think he will. He was furious and said he never want to talk to me again.

    Now he needs money for rent again. I said no. And there is a huge fight going on. But I am so angy, that if he gets evicted he gets evicted. Enough is enough. He recently bought expensive items, and he obviously couldn’t afford them.

    I have had it, but until I have been reading on the web about this in the past couple of days, have not seen my role as an enabler in this behavior. I truly just love him and want him to have a great life. Sadly I have created a greedy monster, which only is interested in my money. It is so sad, he was a great kid, and I thought we would have a great relationship forever. Now I realize I have to let go of that thought and be prepared for us not having that great family relationship I hoped.

    Instead I am now focusing more on my other family members, my parents, and enjoying them and their company. I have asked them for help once. I borrowed 2000 dollars, and paid it all back as soon as I could. When doing thing with them, I also pick up the bill, because I am with them for pleasure, nor for them to pay for me. I always make sure to take my share of the costs.

    I am just so sad for the whole situation with my son.

  15. Sorry for spelling mistakes, etc. wrote on my cell phone and spell checker obviously didn’t kick in :) tried to fix / edit / update but didn’t go through.

Leave a reply