CommentaryOctober 2019 Commentary

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The Kids Are Alright (So Don’t Mess Them Up)

Here are some real-life parenting scenarios we’ve run into over the years (PS ALL of these kids are GOOD kids):

Your adult child is out of school, and getting by, but barely. You think their abode is a little run down, and maybe not even in a safe neighborhood, and their car is on its last legs. However,  you know they are often going out with friends and find a way to travel.

Your adult child is a single parent.  The baby daddy is a loser who rarely pays child support.  She’s making it, but she’s accumulating debt quickly to do so.

You paid for your daughter’s wedding- it was substantial.  Your son has no intention of getting married.  He does want to buy a house and asked you for a gift equal to the wedding cost, but he’s young and may not be able to maintain a house after he owns one.

Your son is married with children. His wife, who works, has just been diagnosed with a major illness that will take her out of work and render her unable to care for children for over a year.  They are not prepared financially.

Your daughter has developed issues with alcohol.  She’s in and out of jobs and moves constantly.  She says she’s fine and puts on a good “show”, but you know she’s slept in her car and it’s happening more and more frequently.

All of these scenarios have variations of needs we see regularly in our office. What would you do in these scenarios?  Better yet, what questions would you ask before you did anything in these scenarios, or others?

We’re going to start off with this: when parenting your kid, there is no “Right Answer”, there is only “Your Answer”.  What we mean by this is that no one solution fits all.  And, as soon as you think you have it all figured out, it’ll all change.  With that being said, how do you decide what to do? We encourage our clients to ask themselves a number of questions so that they can set parameters that make sense for their family.  Here are a few that we almost always ask:

  • Is your own oxygen mask on? If you are not in good financial shape for the long run, continuously bailing out adult children will not make the situation better. If you are in good shape now, are you also taking care of your long-term needs?  If that is also good, then you can focus on the needs of your adult child.
  • Are your kids willing to adapt and change, or do they just want a payout from you so they can have a different lifestyle result without being personally responsible for it?
  • Are your kids willing to pay you back or help you in some way to contribute to the solution?
  • Is this a situation that requires a contract that sets up expectations and boundaries, or should it just be a gift, given the situation? If you can’t allow it to be a gift or establish a contract, is that because of their issues or your issues with money?
  • What are the REAL needs of your adult child versus your needs? Here’s what we mean by this: does your adult child really need money, or do you need to give them money to ease your feelings?
  • If you need to provide long term assistance to an adult child, what sacrifices are you willing to make to adapt your lifestyle so you can survive long term as well?
  • Did they ask? Is it any of your business? Do they always ask, or is this a big and unusual deal for them to ask for help or need it?
  • Are they headed for a real disaster?

Let’s discuss the above scenarios:

Look at scenario one- if they are “doing fine” and making their life work, it may not be YOUR lifestyle or how you did it, but pointing that out and offering regular financial assistance can come across as you passing judgement or implying that you don’t think they can’t do it.  If they are having fun and asking for money- are you keeping them from stretching for that next job or promotion? Adult development requires some struggle, just as child development does.  Make sure your gifts are given for the REAL benefit of your kid.

In the second scenario, your adult child may clearly be on a rough path that may get much worse before it ever has a chance of getting better.  Ask yourself this: “How can I help her to make her situation better for the long term?” Would this be financial assistance to pay for job training where she could make more money?  Would it be childcare assistance so she could work another job?  Could you buy a home for her to live in at low rent, but then you keep the asset for your own needs long term?  Simply throwing money at her month after month may not be the most helpful or creative way to help get her on a better path.

In the third scenario, equality seems to be the issue, but is it?  From the time your kids were born, did you start counting how much you spent on each to make sure it was down to the penny?  Probably not.  Don’t let this throw you because of guilt.  Why did you pay for the wedding?  Was it a values call, or just an assumption on your part you would pay for weddings for your kids?  What if you give the down payment money to your son, and he can’t maintain the house?  What if he needs money for a wedding down the road, or for his education later?  If you pay for this, do you make it clear that the bank and mom and dad is closed to both kids after?  But then what if one of them needs money for another item later- do you always equal it out?  Before you know it- quick sand!  Might you instead ask yourself what items you will assist an adult kid with- college, wedding, home down-payment, car, etc.  Set a budget, and when each kid’s “bucket” is dry, it’s dry?  (Caveat- what if there is an emergency later?)

In the illness scenario- this is a horse of a different color.  It’s a clear need, and the decisions made can impact them and you for life.  The questions you should ask should be all about risk management.  How can you help mitigate whatever risk they are facing with information and strategy? Are they willing to share their entire situation so you can look at their cash flow needs, insurance protections and legal work in place to stop as many leaks as you can before they happen?  Are there different ways to help besides just money? How do you help the family recover?

The last scenario is always the hardest.  The child is on a collision course and they may no longer have any control. You may not have any control.  The question we ask most is, “What help do you need as a parent?”  Al anon Meetings or support groups for families with children with mental illnesses can be incredibly productive and help with resources for you.  Individual counseling can also help you move from the emotional side of your brain to the more logical so you can make a balanced decision.  If it looks like it will be a long-term problem, trying to find long term solutions may work better than short term band aids.  However, you can’t put yourself at risk.  If you need to provide long term support to the adult child, be realistic about what changes you should make to your own lifestyle so you can sustain yourself as well.

We’ve spent a lot of time this year talking about intergenerational planning, and that is not by accident.  35% of our clients have a family member who is also a client of our firm.  On top of that, we hold meetings with the children of our clients when they are juniors in high school, and with their aging parents who need help making decisions.  We hold meetings to open the discussion, and help our clients convey their wishes to their kids as they age.  We GET this topic.  If you need help, we’re here.

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The Planned Approach, Inc.

420 W. 98th Street
Kansas City, MO 64114
(816) 941-0098

Our Important Disclosures

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The Planned Approach, Inc.

420 W. 98th Street
Kansas City, MO 64114
(816) 941-0098

Our Important Disclosures

Insights for Your Life Stage

The Planned Approach, Inc. is an Investment Advisor registered with the Securities and Exchange Commission. No client or prospective client should assume that any information presented or made available on or through this website, is a receipt of, or a substitute for personalized financial planning consulting advice. Financial planning consulting advice can only be rendered after the following conditions are met: 1. Delivery of our Form ADV Part 2A and 2B to you; 2. Execution of an Investment Advisory and/or Financial Planning Engagement Letter between us. You may obtain a copy of our ADV Part 2A Disclosure Brochure containing similar information by sending a written request to The Planned Approach, Inc., 420 W. 98th Street, Kansas City, MO 64114. Additionally, please note that hyperlinks included throughout this site are provided as a matter of convenience and we disclaim any and all responsibility for information, services or products found on websites linked hereto. Please contact the firm for further information. The Planned Approach, Inc. is not engaged in the practice of law and does not provide legal advice. Always consult with an attorney regarding your specific legal situation. The Planned Approach, Inc. is not engaged in the practice of tax consulting.  Always consult with your tax advisor regarding your specific tax situation.