Growing Up, Financially

john“Train up a child in the way he should go; even when he is old, he will not depart from it.” Proverbs 22:6

It was once a rite of passage for children to leave home by the time they turned 18.  Now it seems like young adults are living with their parents for longer periods of time, even well into adulthood. With the financial turmoil of 2008 still sending shockwaves through the economic community, it is not unreasonable to give children a place to stay while they attempt to enter an extremely competitive and difficult job market. And while our children grow up and become adults, we never stop being parents and often it’s hard to know where to draw the boundaries. However, there has to be a cutoff at some point in time—right?

One of the most important steps to encourage independence in your adult children is for you and your spouse to discuss how much to help and how much to let them handle on their own. Both the father and mother must be in agreement on their strategy. The decision is more art than science and it requires prayer and discernment. It is also important to evaluate how well your adult children are handling their money. The last things parents should do is to fund a lavish lifestyle for an adult child who has no thoughts of fiscal responsibility.

There is a fine line between spoiling them and helping them. To be a good steward, don’t give them anything that would increase their lifestyle, but you may want to help them stay out of debt for basic needs. In our own family, sometimes we’ve helped, and sometimes we’ve sensed that the Lord is working in their lives and we shouldn’t help. Many times if we do help it’s not by giving them money but providing something—like taking grandchildren shopping for school supplies, or inviting them over for dinner and being very generous with the portions so there are lots of leftovers they can take home for subsequent meals.

If you do decide to help them financially, it is important to lay down the basic rules.  If the financial assistance is a gift, then it must be freely given and used in any way they wish. A gift is a gift. If the money is given with the intent it’s earmarked for a specific purpose, then the ‘rules’ need to be clearly stated. Maybe you are willing to match some of what they are able to prepay on the mortgage to help them get their homes paid off quickly.  Or maybe you are willing to match what they save for the purchase of their first car. It is important to distinguish between a gift and money that has strings attached. Too many times, the money with strings attached is a subliminal way of controlling your adult children. And unstated expectations about how the money is used can cause hurt feelings on both sides.

Many people ask us if it’s OK to loan money to their adult children.  In our opinion, loaning money to adult children is usually a recipe for disaster.  Once you loan money to someone else, you tend to judge the way they spend it.  If your child is not spending in a way pleasing to you, it can cause tension and strain in the family. And if they delay repayment to you while they spend in ways you consider irresponsible, the anger and disappointment can escalate out of control.

We also caution parents against cosigning.  If you cosign, you are taking on a risk that a professional lender will not take. After all, there is a reason the professional lender requires a cosigner. When you cosign, you become responsible for your child’s debt, just as if it were your own.  If they miss a payment or make late payments, it is reported against your credit history.

Most parents look forward to a visit from their adult children, but what if that visit includes all of their luggage, the TV, a spouse and two grandchildren plus a ten-week old puppy? This is another great opportunity to pray and discern the Lord’s will. If the Lord makes it clear that they are to move in with you, establish ground rules for them staying in your home—and have all four adults sign it. And just as with a lease agreement, they have to move out of they are not faithful to the agreement. Once the ground rules are established, welcome them, just as the father welcomed the prodigal son home.

The best way to prepare adult children to be responsible stewards is to use the MVP approach when they are young—model responsible financial behavior, verbally explain how you make financial decisions and provide practical opportunities for them to manage their own money at an early age.  This requires you to personally become a good steward and live according to God’s teachings. He will guide you toward the right decisions, even if they’re hard to make. To learn more about Biblical stewardship principles, contact Compass Catholic today.

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