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We have always concentrated on the Millennials when it comes to getting financial help. But truth be told, their parents (and grandparents) are also in some kind of financial trouble. It seems like the family finances have not yet really healed after the Great Recession happened. Although the government is insisting that the economy has improved up to the level of their pre-recession years, it is clear that not all families are feeling that effect.
According to the article published on CNBC.com, after almost 7 years, the stress from the financial crisis is not yet behind us. 67% of the Baby Boomers and Gen Xers have admitted that they still feel the effects of the crisis on a daily basis. They said that they feel the heaviness of their mortgage, job security and their ability to save for their retirement. In fact, one out of five of these two generations still goes through what is called the post-crash skepticism.
As defined by the study done by Allianz Life, these are the people going through the effects of a financial crisis. These include job loss and witnessing the decreasing values of their 401(k) and their real estate properties. The study revealed that the 20% of consumers from these generations are going through 6 out of 13 effects of the most recent financial crisis. These effects are affecting the financial behavior of the parents and grandparents of Millennials.
Most of us assume that the younger generations are more likely to ask for financial help. While the statistics may prove that this is true, we should not belittle the financial troubles that the elder ones are going through.
When is it okay to help out a financially struggling parent
According to an article published on USAToday.com, the Gen Xers seem to be going through a “middle-child syndrome” when it comes to getting financial help. Their problems are oftentimes overlooked by society because we are so focused on the student loan debts of Millennials and the retirement woes of Baby Boomers. We are all ignoring the fact that this generation is sandwiched in between. They have the most expenses because of their multiple debts and they are running out of time to save up for their retirement. The article revealed that ⅔ of Gen Xers have saved for retirement and 4 out of 10 do not feel confident that it will be sufficient. This generation is actually the ones who have lost almost half of their personal wealth after the Great Recession. If you look at their situation from the pre-Recession years, they are obviously in need of financial help. If they do not get the assistance that they need, this generation could end up like the Baby Boomers. According to an article published on Forbes.com, the majority of this generation is in danger of relying only on Social Security Benefits – which is far from the amount they require to retire comfortably.
Of course, helping them out is easier said than done. Just like the advice that we give to parents who want to help their struggling children, Millennials have to be careful when trying to help out their parents. The same is true for Gen Xers trying to help their struggling Baby Boomer parents. You need to think about how you can best help out your struggling parents. There are instances when it is okay for you to lend a helping hand to your parents and there are moments when it is not okay.
Here are the instances when it is okay for you to give financial aid to your parents.
If your finances are stable.
First of all, your finances should be in good shape before you lend a helping hand. Ask yourself if your finances are stable enough for you to provide financial help. If not, then you need to find another way to help out your parents. While you owe a lot to your parents, you should also think about your own financial needs. If helping them out will put you in a very bad financial state, then you should think twice about giving them money.
If it is a one-time financial aid.
Another instance when it is okay to give financial assistance is when it is a one-time favor. If their heater breaks down in the middle of the winter season and they do not have the money to have it fixed, then you should help them out. This is an example of a one-time financial help. But if they are asking you to help them on a monthly basis, then that is an aid that you need to think twice before committing to.
If they are financially responsible but is going through a financial hardship.
You should also give your parents financial help if you know that they are financially responsible, but they have been through various mishaps. For instance, if a parent is sick and unable to continue working or have spent most of their savings, then they will need your help and if you are able, you should give it. Sometimes, bad things happen to good people and they deserve to be given assistance during these moments.
If they compromised their finances to help you earn more.
Finally, you need to give your parents financial help if you are the reason why they are now in a difficult financial situation. If they dipped into their retirement fund in order to help you pay off your college education or student loan debt, then it goes to follow that you should help them in retirement. At the very least, you should return the amount that they got from their retirement money as soon as you start earning an income. You cannot abandon them because they helped you out first. If it was not for their help, your own finances would not be as stable as it is right now. You owe it to your parents to provide financial help.
Tips when your parents ask for financial aid
Of course, your own love for your parents might make it an easy decision to help them financially. It is not just the gratitude for what they have spent to raise you. But the way they took care of you would naturally prompt you to help them out when they are in a difficult financial situation. When anyone in the family has financial troubles, we all get to help each other.
But despite your willingness to provide your parents with financial help, you still need to be careful. Think about how you will do it so it will not compromise your own financial situation. Sometimes, there are instances when saying “no” even to your parents is the best way to help them. This is especially true if they are irresponsible with their finances. But if you know that your parents deserve your help, then go ahead and do it.
Here are some tips that you should consider when you are providing financial help to your parents.
- It is better to give than to loan. If you really want to help them out, giving is the best way to do that. If the amount is not too great, you might want to just give what they are asking for. Do not make them pay you back. It will free you from the burden and stress of having someone pay you back a loan.
- Give your time. Sometimes, you can do more if you offer your time and not just money. For instance, if your parent needs something fixed and you know that you are able to do it yourself, then why not offer to help? That should be more valuable than just giving money.
- Plan how you can recover the money. If you will give financial help, you need to come up with a plan that will focus on getting that money back. This is true regardless if you are giving or loaning the money. At least, you will not really lose that money even if what was borrowed will not be returned.
- Seek out alternatives. If you cannot provide the full amount of what they need, you should, at least, help them seek out alternatives that will complete what they require. Help them look for a loan and be with them while they are applying.
While it is not your obligation to return what you parents gave you, it is important that you help them find retirement security. Even if you cannot give the financial help that they need, there are other things that you can do to assist and support them through a difficult situation.
