Are you putting your family’s financial needs ahead of your own?

An AARP survey released earlier this year found that half of grandparents are helping out with education expenses, 37% are assisting with everyday living costs, and 23% pitch in when it comes to medical or dental care.Recently, there’s been a lot of news about grandparents helping out their grandchildren – and, by extension, their children – financially. An AARP survey released earlier this year found that half of grandparents are helping out with education expenses, 37% are assisting with everyday living costs, and 23% pitch in when it comes to medical or dental care.

This is, no doubt, an extension of the economy, at least in part. When we’re in financial trouble, we turn to family first. And when our family members are in financial trouble, we reach in our wallets and help them any way we can. Even in good times, you want to help your grandchildren go to college, or buy their first home, or walk down the aisle. But it’s a new bit of research out of the UK that has me worried, with this disturbing news: Over 1.7 million grandparents and parents are being pushed into debt by so-called “greyday” loans – financial assistance provided to their adult children and grandchildren.

I get – and, quite honestly, applaud – the fact that you want to help out. But your own needs, like your retirement, your medical expenses, and the roof over your head, have to come first. Here, how to strike a
balance:

  • Set limits. “Sometimes grandparents give until it hurts,” says Lynnette Khalfani-Cox, founder of TheMoneyCoach.net. “They go overboard, sometimes out of guilt, or they’ve been emotionally manipulated, or they’ve gotten bad advice.” A piece of candy here and a new pair of shoes there likely won’t break the bank, but if we’re talking about sizable gifts, toward college or other major goals, you need to plan it out and perhaps consult a financial planner to see how that cash might affect your other goals.
  • Think long term. Maybe you can afford it now, but what does the future hold? Don’t just think about how opening your wallet will impact your month’s budget; consider how it might change your budget for the year. “Ask yourself, is giving this gift now going to create a financial hardship for me this year or in the future? If the answer is yes, that’s a gift you should think twice about,” says Khalfani-Cox.
  • Consult the parents. If you want to make a contribution toward your grandchildren’s future – college or otherwise – it’s always best to ask their parents first. They may have a plan in place. Perhaps they have a 529 college savings plan they’ve already started, and you can add a contribution here and there.
  • Leave the money out of it. If you don’t have the cash to give, consider another gift – of your time, your values, your advice.
    Perhaps you can watch the children while a parent works part-time, if they’re young, or spend time with them passing the lessons you’ve learned over the years. Giving back, and leaving a legacy, doesn’t have to be about money.
Jean Chatzky

About Jean Chatzky

Jean Chatzky, the financial editor for NBC’s TODAY show, is an award-winning personal finance journalist, AARP’s personal finance ambassador, and a contributing editor for Fortune magazine. Jean is a best-selling author; her eighth and most recent book is Money Rules: The Simple Path to Lifelong Security. She believes knowing how to manage our money is one of the most important life skills for people at every age and has made it her mission to help simplify money matters, increasing financial literacy both now and for the future. In April 2013 Jean launched Jean Chatzky's Money School , a series of college-style, interactive online personal finance courses that give men and women across the country the opportunity to learn from and interact directly with her. Jean lives with her family in Westchester County, New York.
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3 Responses to Are you putting your family’s financial needs ahead of your own?

  1. Leslie R. says:

    I agree that during the current economy there is definitely more giving being done by families and I like the four points for consideration. However, for me its hard to think of my future when I see my family problems right in front of me today. I t also seems that I am helping both my kids and my parents. I know it will affect me later but I feel I have to help them now. This is a hard topic to balance financially and emotionally.

    I am a Wells Fargo employee.

  2. Anonymous says:

    Yes, this is very difficult to balance. I am a grandmother with a very bright grand-daughter in college. Her situation is so overwhelming with health issues and trying to stay in school. I try to help but I had to finally introduce her to Social Services I just can’t do any more.

  3. yvonne says:

    Our national attitude of independence is one reason this doesn’t work out as well as it could. When grandparents help out with college tuition, down payments on homes, etc., it is thought of as a loan that will be paid back. It often isn’t and that leaves the grandparent sometimes in financial trouble. However, in other cultures, grandparents and parents paying for these kinds of large expenses are routine and not necessarily thought of as loans. Children stay longer in the family home and grandparents and parents aren’t sent off to assisted living facilities when they are too old to be useful. Everyone in the family is taken care of when they need it, not just the kids. It makes better sense and makes people less dependent on government social services which aren’t always that helpful.

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