As your parents grow older, they may require extra money. Medical bills, unexpected repairs, or lifestyle needs may drive them to ask you for financial help.
It could also be due to the instability in financial markets affecting their retirement funds. Or they may be concurrently facing many of these problems. As their beloved child, you want to help – but the question is – is it a good idea to give them money?
Here are some things to contemplate before you decide if you should or should not.
#1: Their reasons for needing more money
When you’re considering giving your parents money, it is essential to understand why they need the money. Understanding the reasons will help you determine the best way to assist them.
Maybe it could be a loss of income or savings? Or it could be a hike in sudden expenses related to home/car repairs or medical spendings that exceed your parents’ financial means. These situations are relatively straightforward, and it would be appropriate for you to extend a hand.
On the other hand, if they need money because of bad financial choices – gambling or alcoholism – you should rethink the situation. In such circumstances, financial assistance might be enabling your parents, not supporting them.
So what’s the difference?
#2: Contrast between supporting and enabling
There’s a subtle difference between supporting and enabling your parents. Supporting someone is providing them access to a need they are not able to meet. While enabling someone is when you are doing something for them that they should be doing on their own (or should not indulge in at all).
Giving money to your parents to help them pay bills, maintain their home, or go through a minor surgery are examples of supporting them. But if your mum or dad bust the month’s budget on Toto and beer, lending them money may reinforce their negative behaviours and be harmful in the long run.
#3: Is it within your means?
Once you have understood the nature of their problem and decided to help, you must evaluate if it’s within your means. Consider these questions now:
- What are your financial resources?
- Do you have surplus income or cash at hand?
- Do you have liquid assets available, or can you sell surplus possessions or investments?
- Can your brothers and sisters help, and if so, to what degree?
No matter the need, you should not overextend your finances or jeopardise your financial future. Putting yourself deep into debt to support your parents, or putting off a significant life event such as buying a home or having a child, is unwise.
Straining yourself by giving more than you can afford can lead to feelings of bitterness and resentment. Trust us; this will become a major source of stress in your life as you age and face your own set of money problems later.
#4: Have you talked with your partner?
If you are married or in a long-term committed relationship, you must include your partner in your financial decision-making.
It is likely that your spouse doesn’t feel comfortable or render the situation feasible to give your parents money. That’s why having a dialogue is a basic form of respect for each other.
Should your partner be welcoming of the idea, you should establish in clear terms how much money you are giving or lending your parents and what the agreements are. You should also evaluate the likely needs of your partner’s family needing financial aid soon.
Factoring all the above can aid you in making better money calculations.
#5: Do you have a set of terms?
Before writing your parents a cheque or handing them a stack of cash, you must put forth a definite set of terms. Here are some questions to guide you:
- Is this sum a gift or a loan?
- Have you agreed to a one-time loan, or is it an ongoing disbursement?
- Where will this money be immediately spent?
- Will they repay you – and if so, when and how?
Having a detailed conversation with your parents is essential. If your parents are okay with it, ask them to put the agreement in writing. This could minimise potential conflicts and finger-pointing as time goes by.
Find other ways to help
Those who do not have the financial means to assist their parents should not worry too much. There may be other ways to offer a hand.
For example, you can hands-on the minor home or automotive repairs or get them their weekly groceries. You can also work with them to find less expensive solutions to the problems that led them to need money in the first place. Or maybe you can offer some advice on planning a budget.
The help your parents need may not always be in the form of cold hard cash. Take some time to contemplate the points mentioned in this article to determine whether it is good to give your parents money. We hope you will settle on a suitable approach to the issue soon!