What to do When Your Adult Child is Asking for Money - Houston weather, traffic, news | FOX 26 | MyFoxHouston

What to do When Your Adult Child is Asking for Money

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HOUSTON (FOX 26) -

The telephone rings and it's your adult child, asking for a small loan to help make ends meet, some cash to pay off a debt or your assistance with some other need. Of course, you want to do everything you can to help, but can you afford to do so without upsetting your own financial well-being?

 

Q #1 – It seems this is a growing trend?

  • Yes. Student loan debt has doubled
  • Average credit card debt has up 32%
  • Difficult job market for new grads

Q #2 – What should a parent do when they get a request?

  • Ask yourself, "Can I afford to help?"
  • Mixing family and finances can be tricky
  • Support your adult children in ways you can afford

Q #3 – What about tapping retirement account to help?

  • Consider financial consequences:
    • 10% penalty if under 59-1/2
    • Becomes taxable income & your tax bill increases
  • Consequences for stopping contributions as well
    • You lose the ‘free money' (employer match)
    • Miss out on compound interest

Q #4 – What alternatives do you suggest?

  • Look for other ways to help
  • Let them move back home
  • Watch the grand kids
  • Pay for gas or groceries
  • Be creative
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