By Jasmin Brown

BDO Debt Solutions

The Financial Impact of Assisting Adult Children

Sep 20, 2024 | 7:51 PM

“The views and opinions expressed in this article are those of the author and do not necessarily reflect the position of Pattison Media and this site.”

It is totally natural to want to provide for your children and give them every opportunity to thrive. These days, it is common for many parents to find themselves offering financial support for student loans, phone bills, down payments, and even just general expenses. But what happens when this generosity leads to financial strain?

The Complexity of Giving

Recently our office assisted a mother, who we will refer to as Cynthia, who exemplifies this issue

Widowed and working part-time while relying on a modest pension, she owns a home with a mortgage and has three grown children. When one son struggled with car payments, he turned to her for help. Understanding the increasing financial challenges faced by younger generations, Cynthia felt compelled to assist. However, her support came at a cost – she began using credit cards to handle the shortfall in her own expenses, leading her into significant deb

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Despite the mounting bills and calls from creditors, Cynthia hesitated to acknowledge the severity of her situation. Fearful that denying her son financial aid might distance her from her grandchildren, she felt trapped.

Wanting to avoid filing a bankruptcy, we were able to assist her with a consumer proposal. Cynthia’s monthly payments were reduced from $800 to $250, and all interest stopped.

Tips for Parents: Managing Financial Support

When considering assisting children, you have to be realistic about your own financial situation and whether you can practically do that. Here are some tips for parents navigating financial support for their children:

1. Set Clear Boundaries: Establish limits on financial support. Communicate the criteria for assistance, including amounts and conditions. Sticking to these limits is crucial.
2. Encourage Open Communication: Foster an environment where both you and your child can discuss financial needs honestly. Lack of communication can lead to misunderstandings and strain your relationship.
3. Hold Family Meetings: Organize annual discussions with older kids about budgeting for family expenses, vacations, and holiday gifts. This teaches them financial literacy and helps them understand money management.
4. Involve Kids in Decisions: Allow your children to participate in financial discussions that impact them. This can help them grasp the value of money and make informed choices.
5. Make Help a Lifeline: Encourage your children to view financial support as a rare lifeline rather than an ongoing solution. Setting clear goals and timelines for assistance can prevent dependency.

Ultimately, if the bank of mom and dad ends up burdening both parent and child with debt, it defeats the purpose of providing support. While it’s important to assist your family, it should never jeopardize your own financial health. Remember, it is okay to help your family financially, but only if you can afford it.

If you are having trouble making ends meet each month, finding the right debt solution can help. Visit the BDO Debt Solutions website for more information, or call 1 855 BDO DEBT to book a free, no obligation consultation.

Jasmin Brown is a Senior Vice President overseeing the insolvency practice in Saskatchewan. She is committed to providing creative and practical debt solutions with empathy, understanding and professionalism to help people overcome their financial difficulties.