We have always concentrated on the Millennials when it comes to seeking financial help. But truth be told, their parents (and grandparents) can also face financial trouble. In fact, many American families were still financially recovering from the 2007-2009 Great Recession when the job crisis that accompanied the COVID-19 pandemic began unfolding in 2020.
According to a 2020 study conducted by the Transamerica Center for Retirement Studies, 53% of Gen X and 58% of Baby Boomers said their employment situation was affected as a result of the pandemic. Factors that impacted their income included reduced work hours, reduced salaries, layoffs and furloughs.
In addition, approximately one in four workers said they lost confidence regarding future retirement plans when the pandemic hit. This decline slightly increased throughout generation groups: 20% of millennials, 25% of Gen X and 32% of Baby Boomers were feeling uncertain about their retirement savings.
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 push aside the financial troubles that seniors are going through, as many have lost a lot of their savings due to the pandemic and the poor performance in the stock market.
When is it okay to help a financially struggling parent?
Gen X is often referred to as America’s “middle child” since they are sandwiched between two larger, much different generations. 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. Keep in mind this is also the generation that lost almost half of its personal wealth during the pandemic.
Gen Xers often have the most expenses due to their multiple debts and because they are running out of time to save up for retirement. According to another 2020 study, 58% of Gen Xers said they would consider looking for a job in retirement to cut down on costs. In addition, 4 in 10 Gen Xers delayed or considered delaying their retirement due to financial troubles caused by the pandemic.
Of course, helping parents is easier said than done. Just like the advice we give to parents who want to help their struggling children, Millennials must be careful when trying to lend a hand to their parents. The same is true for Gen Xers trying to support their struggling Baby Boomer parents. There are instances when it is okay for you to provide assistance and there are times when it is not the best idea.
Here are the instances when it is okay for you to give financial aid to your parents:
If your finances are stable
You should first ask yourself if your own personal finances are in good shape before you lend a helping hand. If not, you should find other ways to help your parents. While you may feel that you owe them a lot, you should also think about your own financial needs. If giving your parents money will put you in a worse financial state, you might want to seek other options.
If it is a one-time financial aid
Another instance when it is okay to provide financial assistance is when it is a one-time favor. If their heater breaks down in the middle of the winter and they don’t have the money to have it fixed, you should help them out. But if they are asking you to finance them on a monthly basis, you should think twice about it before committing.
If they are fiscally responsible but going through a financial hardship
You should also give your parents financial help if you know they are financially responsible, but they have been through various mishaps. For instance, if a parent is sick and unable to continue working, they will need your support. Sometimes, bad things happen to good people, and they deserve a boost during these instances.
If they compromised their financial situation to help you earn more
Finally, you should consider offering your parents financial assistance if you are the reason they are now struggling. If they dipped into their retirement fund to help you pay off your college education or student loan debt, then it might be a good idea to return the favor, if possible. At the very least, you could return the amount you received from their retirement money as soon as you start earning an income. Keep in mind that if it wasn’t for their help, your own finances would not be as stable as they are right now.
Tips for when parents ask for financial aid
Of course, your love for your parents might make it a done deal 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. When anyone in the family has financial troubles, we all jump in to help each other.
But despite your willingness to provide your parents with financial help, you still need to be careful. Think about your strategy so it will not compromise your own financial situation. Sometimes, there are instances when saying “no,” even to your parents, is the best response. This is especially true if they are irresponsible with their finances. But if you know your parents deserve your help, then go ahead and get them out of a financial bind.
Here are some tips 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. Don’t make them pay you back–it will free you from the burden and stress of waiting for the money.
- Offer your time. Sometimes, you can do more if you offer your time and not just money. For instance, if your parents need something fixed and you have the skills to do it yourself, why not offer your services? That should be more valuable than just handing them money.
- Plan how to recover the money. If you give financial help, you should also come up with a plan to get paid back. This is true regardless of whether you are giving or loaning the money.
- Seek alternatives. If you cannot provide the full amount your parents need, you can help them seek out alternatives that will complete what they require. Support them by looking for a loan and by being with them while they are applying.
- Have your parents look after your children. If you have young children, you can ask your parents to watch them in lieu of a babysitter. Not only are you paying them for their help, but it also provides more precious time for them to spend with their grandchildren
While it is not your financial obligation to return what your parents gave you, it is important you have their back. Even if you can’t provide the financial help they need, there are other things you can do to assist and support them through a financial crunch and throughout the rest of their lives.