As a parent, it's hard not to want to help your kids.
I know that I am always interested in helping my son, and encouraging him to succeed.
However, we all struggle, and our children are likely to struggle at some point, too.
If you have an adult child who is struggling financially, you probably want to help.
But it's important that you are careful from the outset.
Here are 7 tips for helping your child get back on his or her financial feet:
1. Define Expectations Up Front
Be clear about your expectations for your child from the beginning. It's rarely comfortable to talk about money, and getting back on track, but it needs to be done. Be clear about what you will expect while your child is living with you. Do you expect help around the house? A nominal amount of rent to be paid each month? Efforts to find a job?
From setting a deadline for moving out, to how you expect your child to behave at home, to how much you will babysit your grandchildren, get it out there up front so everyone is clear on what to expect.
2. Ask for Something
It's important to ask for something. Whether you ask for $100 a month in rent, $50 to help pay for utilities, or help making dinner each night, you should ask for something. You don't want your child to take advantage of the situation. Instead, create a situation in which they have some skin in the game, and a reason to improve their situation and move on.
3. Encourage Financially Responsible Behaviors
When my mom helps her adult children, she makes it clear that they need to be taking steps to improve the situation. In order to move back home they have to be willing to either be actively looking for a job (preferably to get at least a part-time job to start) or attending school in an effort to develop a marketable skill.
Consider what your child needs the most help with. If your child is in debt, make it clear that you expect him or her to put the money they are saving in rent toward paying down debt. Make it clear that you expect your child to actually work toward getting back on his or her financial feet, and that this isn't just a free ride.
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4. Consider a Contract
You can consider making a contract, spelling out what each party will do, and including a deadline.
This can be useful in ensuring that everyone has something in writing to refer to.
Trying to keep the situation as business-like as possible can help in the long run.
However, you do need to be careful.
Sometimes, all a contract does is make adult children defensive. They don't want to see it as a business situation; they want to see it as something that you are doing to help because you are a parent.
5. Set Limits
There do need to be limits of what you will do. It's great that you are willing to babysit your grandchildren on occasion (especially while your child goes to work, or looks for a job), but you don't want to be seen as an anytime live-in babysitter.
Be clear about your limits. You don't want to be buying video games for your child, or getting expensive snack foods all the time. The point of this exercise is to help your child learn how become financially independent, not take advantage of you.
6. Don't Tap Into Your Retirement
Avoid tapping into your retirement funds to help your child. Whether your child is living with you or not, it's important that you avoid draining your funds in order to help your child get back on his or her financial feet.
While it seems selfish at first, the reality is that you don't want to have to rely on someone else because you depleted your retirement funds. Stay out of your retirement funds, and help as much as you can.
7. Think Twice Before Co-Signing
In some cases, co-signing for your child can help him or her get the credit needed to move forward. However, you should think twice before committing yourself. You become responsible for the debt when you co-sign, and you could see your credit score affected. Think twice before you co-sign, and realize that you might be better off helping in other ways.