It doesn’t matter if they’re playing tag on the playground, entering their first semester at university or if they’re grown adults with babies of their own – if your children are in trouble, you’re there to lend a helping hand. But what happens when the kind of trouble they’ve found themselves in, is massive amounts of debt?
For many of you, your parental instincts will kick in and your initial reaction may be to help pay off your children’s debts and give them a fresh start they need – the last thing you want is to see your child struggling. But, is this really the best thing for them and their future well being?
We asked our trusted advisors here at Smythe Insolvency (who also happen to be parents) to weigh in on this one and here’s what they had to say: simply coming to your children’s rescue and paying off their debt for them can do more harm than good – a bailout won’t teach your children how to stand on their own two feet and find a way out of the mess they’ve made.
If you’ve found yourself parenting a child that’s less than responsible with their finances, we’ve come up with a list of some great ways that you can help your adult children with their debt, without making a withdrawal from the Bank of Mom and Dad.
Let’s be honest, chances are high that you’ve messed up a time or two when managing your money, especially when you were just starting out. If you’ve been in a similar situation as your kid, share your experience. The details won’t be the same, but this approach will help facilitate an open discussion about financial struggles and how to successfully recover from them without seeming like you’re judging or lecturing.
Familiarize yourself with the latest technology available to help with budgeting and personal finances. Your children are creatures of the digital age and will respond better to and feel more comfortable using one or more of the many websites and apps that help people manage their money. Maybe you should consider signing up too – what could it hurt?
The solution to their problems doesn’t have to include the latest and greatest technology. You can offer to teach your children things like how to make a meal from scratch, hemming and mending clothing, growing a garden or changing the oil in their car - all important life skills that can really make a difference financially.
Give your children the extra time they need to make some extra money or provide some creative solutions that will help them continue to pay down their debt on their own. You could offer to take care of your grandchildren while they work extra hours, or host a family dinner on Saturday nights. This way, your kids can get out of the house for dinner without an expensive cheque coming to the table at the end of the meal. You could let them live in your basement rent-free, as long as they’re working hard to get themselves out of debt (and not playing video games). The options that you can provide to your children will vary by circumstance, so get creative!
When your kids are strapped for cash, it may seem like an inopportune time to stress the importance of saving, but do it anyway. Planting the seed now can get them in the habit of automatically setting aside money every week, even if they can only manage to set aside $20. This money-saving skill can make a huge difference down the line and help them build up an emergency or retirement fund.
More than cold, hard cash, they need guidance, love and support. You might find yourself on the other end of frustration and hopelessness – we all know that paying off debt and changing financial habits can a long and exhausting road. Your support and patience are invaluable to helping boost their confidence in their ability to get back on track and you’ll be able to help them see the light at the end of the tunnel.
Before you reach for your wallet to solve all your children’s problems, give some of these tips a try. Yes, it may take more time and effort on your part to support them while they pay off their debt, but trust us, the end result is worth it. Not only are you helping them build their finances, you’re also helping to strengthen their character and sense of self-worth. And, all without spending a dime – it’s a win-win!
If you or someone you know is struggling with a mountain of debt that is too high to overcome, contact us today at one of our 13 offices conveniently located throughout the Lower Mainland and Vancouver Island. Our Licensed Insolvency Trustees are trained to work with you to determine the underlying cause of your financial difficulties, as well as assist you in improving your financial management skills, and provide you with effective budgeting strategies to help you achieve your monetary goals.
Licensed Insolvency Trustee
Greg Best enjoys working with clients to create solutions for their financial needs.
CPA, CA, CIRP
Licensed Insolvency Trustee
Chris Sinclair believes a practical approach is required to solve serious financial difficulties.
Cynthia’s goal is to ensure that every client feels respected and understood and to instill hope that they can get their life back by giving them the fresh start they deserve.