Some grandparents are moderately well off and have quite a lot more money than their middle aged children, so sometimes are under pressure to lend or give money to them.
Some grandparents are ticking along OK, but don’t have the financial means to help their middle aged children or grandchildren.
Sometimes their children are doing okay or even pretty well, and don’t need to ask their grandparents for financial help.
Sometimes the children are doing much better than the grandparents, and want to help them financially.
Many parents are squeezed, sometimes from both sides.
They are commonly still providing financial help to their adult children - who are perhaps still living at home, or need financial support at university - while sometimes helping their ageing parents with their finances and in other ways too.
Meanwhile, they are trying to get their own finances together ready for their own retirement.
A recent US study revealed :
w 48% of middle-aged parents last year gave some financial support to their grown children.
w 21% provided some financial support to their parents aged 65-plus.
w 15% gave help to both their adult children and to their parents.
If you are being squeezed, be firm, be fair, know what you are paying or lending for, and if necessary seek a proper understanding of their finances.
The key issue is pretty clear. Don’t give what you can’t afford to give, or you may well wreck your own retirement.
“The easiest way to teach your children the value of money is to borrow some from them.” - Anon
Young adults can feel the pressure too, particularly with house prices so high in our major centres, and many of them have student loans pay off as well.
It might be worth helping them with higher education, emergencies, their first home, or perhaps some funding to help them get into business.
Some parents allow adult children to take a mortgage security over their house to help them get started – but please be careful - there is no point in two families going down financially if things go wrong.
It may be better to help them get into business – productive help that can increase their cash flow, rather than increasing their borrowings.
On the other hand, don’t take away their chance to make it themselves.
· Give them a fish and you feed them for a day
· Or just give them a fishing rod
Non- cash help has value
Child minding while they work
Painting , repairs and maintenance to their homes and gardens
Working in their businesses
Many many other ways
Intergenerational sharing of ideas and knowledge
Everyone might benefit enormously by studying how their parents and/or their grandparents have succeeded (or not succeeded ) and putting that knowledge to good use.
That is, if people will listen …………………………………….
If you are retired, you have zero working years left so you cannot go out and earn and save the money if it does not come back.
If you are working and only have 10 to 15 years working life left, you have a limited time frame to earn and save the money it does not come back.
Most young adults have 30 to 40 years working life in front of them, and endless opportunities around the world.
Lending money checklist
Don’t help others too much and run yourself short
Be firm if need be
If lending, find out why, and be honest with yourself, will the money come back ?
If in doubt , do half
If you don’t understand their finances, ask your lawyer, accountant or financial adviser
Share and listen to knowledge
Don’t go guarantor unless you can afford to lose
Don’t let money issues destroy your family
Don’t let the “squeeze” lead to excessive stress
This article was supplied by Alan Clarke who is the author of a book entitled “Retire Richer” which is a practical guide for everyone age 25 to 85.
Alan also writes a regular blog on www.acfs.co.nz
Alan is an authorised financial adviser (AFA) and his disclosure statement is available on request and free of charge.