Helping Your Adult Child Overcome Debt

Your grown kids have fallen into debt and may need your financial help. Or do they?

The kids have flown the nest, but that doesn't mean that they're out of your life. Sometimes, they come back with needs beyond a load of laundry or a home-cooked meal. What do you do when they come home to ask for financial help?

Tough love

Take a good, hard look at your child's situation-from an objective point of view. It's important to disconnect the parenting centers in your brain for this step, because it's all about figuring out how serious your child's predicament really is.

Has she come asking for money before, or is this the first time? Are you dealing with a bona fide disaster, like a divorce, medical bills, or getting downsized from a job? You don't want to feed her bad habits or addictions, if there are any. In those cases, some financial hardship may be the best medicine for the problem. It's called tough love.

Get it in writing

If you feel that the need is legit, it's time to figure out the financial details. Will your child borrow some money from you? If you decide to take this route, draw up a written contract with a repayment schedule. Is she asking you to help pay her bills for a while? Turn "a while" into a set time limit, like three or six months, and consider paying part of the monthly expenses. You need to motivate her to get back on the financial ball again.

Contracts and repayments could lead to some bad blood, though. Resentment and guilt can creep into the cracks of the deal, no matter how professional the contract between you, or how close the family ties are. When that's the case, it might be better to give the money away instead. You can give your child up to $12,000 a year without paying gift taxes, so this could be an alternative if you have spare cash to spend. Be careful not to over-stretch your own budget to help the kids, though. And gifts can often lead to guilt trips, so be careful with your generosity.

Help from outside

Perhaps your wallet doesn't hold the help that your child requires. In some cases, the best help you can give is to lead her to financial counseling, money management classes, or a credit repair service. Every child and every situation is different, but it's often better to get professional help early on rather than feeding a chronic money-handling problem. Counseling and classes are not magic bullets, and it takes time to instill healthy habits.

You can still be there for your kids after they've grown up and flown the coop. It might not be the kind of help they were hoping for, but it will be exactly what they need.