Lending Money to Adult Kids

UPDATED: April 21, 2022

Your child looked to you for help and assistance from the moment they came into this world. You’ve lived up this request, raised your child, supported them, and watched them grow into adulthood. Now that your child is an adult, you may be asking yourself, when do I stop helping them financially?  

This is a question many parents struggle with and lose sleep over. This question not only weighs heavy on your mind, it’s a deep burden to carry in your heart as well. There are opposing opinions on the matter. It probably makes sense to believe in the ‘one must protect themselves’ stance for numerous reasons, as we’ll review below. 

Staying Proactive

Your adult child should know your parental love and support will never end, but at a certain point, support no longer includes financial assistance.  Proper boundaries need to be established well before a situation ever arises.

If you lay the ground rules before your child asks, you are staying in control. You are establishing a foundation that will serve you well for the years to come. Proactively managing all aspects of your finances is a critical pillar to your overall financial well being. 

The Cons of Lending Money to Adult Kids 

As mentioned above, taking the stance of protecting yourself instead of lending financial assistance to your adult child is important. Here’s why: 

Life is Full of Curve Balls

These curve balls give us tough skin, build up our beliefs and value systems, and serve as a foundational piece to our development. If you step in to help your child avoid the financial curve ball that was thrown their way, you are preventing them from developing the grit and the resilience they’ll need to navigate life in the many years that come.

By taking the stance of protecting yourself, you not only keep the cash in your pocket, you are forcing your adult child to grow, develop, and mature - a lifelong commitment you take on when you become a parent. 

Put Your Retirement First

As you approach or enjoy your retirement years, managing your financial outflows becomes increasingly more important. You have a limited ability to earn income, or offset any income loss. If your adult child is asking for $500 in a one shot, it probably won’t throw off your entire retirement plans. If $500 becomes $1,000, which becomes $1,500, this can eventually spiral out of control.

Keeping the Relationship Healthy

This isn’t all about the financials, it’s about keeping a relationship strong. Mixing money and family is a messy situation, and one that should be avoided.

Imagine you agree to lend your child some money, and they promise to pay you back. Months pass by and that debt is not repaid. You may begin to get frustrated and voice your frustration to your son or daughter. This may not be well received, resentment may become present, and now your good intentions of lending money is causing toxic energy in the relationship. The risk of losing money, and the relationship, isn’t worth it! 

Creativity, Determination and Grit.

When someone is forced to figure out a situation on their own, they find a way to make it possible. Many success stories were started when someone was going through a difficult financial time.

If you step in and bridge the financial gap for your son or daughter, the inspiration and determination for a better financial future may never be born, as they never felt the true ‘pain’ of the situation. 

Benefits of Lending Adult Kids Money 

• The first benefit that stands out is the instant gratification. If you lend your adult child money, you help them side step a messy financial situation.  

• Watching a loved one struggle financially is uncomfortable. That discomfort won't exist if you bridge the gap. 

• Negative financial situations tend to linger. They can live on one's credit report or history for a handful of years, and that can cause more challenging times for your son or daughter in the future. If you step in and help them, not only are you helping the present moment, you’re potentially preventing any long lasting side effects. 

Shades of Grey 

Life isn’t binary, nor is this debate. Understanding nuance and the grey area is important, and this nuance can come in many different shapes. Here are two different examples that would result in a different outcome:

Example 1

Your adult child, or their spouse, is battling a serious health condition and cannot earn enough money to offset their medical expenses, or was unable to work due to health issues. Supporting them financially through this situation wouldn’t even be a question. This is when everyone should come together as a family and support anyway possible. Their health and well-being is more important than anything monetary. 

Example 2

Your 35 year old son was recently laid off from his job after he arrived excessively late on numerous occasions. Your son has a history of doing this, and this isn’t the first job he lost because he couldn’t get out of bed with a sense of urgency in the morning. In this instance, tough love is the best love you can give, and if you step in to bail him out of the situation he created, he will never grow up and mature. History will repeat itself. 

Summary 

Becoming a parent is life’s greatest gift. Your son or daughter will always be your child, despite how old they actually are. You’ll always have the instincts to help and support your child, but that doesn’t mean you need to give your adult kid money. 

If you were to give it to them, you may actually be hurting them more in the long term as you remove the ability to learn valuable life lessons. Perhaps teaching them how to make a budget, or walking them through how to consolidate debt could be better solutions in the long run.

In most circumstances, your stance should be to protect yourself. Stay proactive, establish boundaries, and stick to your financial plan.