Providing financial assistance to adult family members, while sometimes very helpful, may also create conflicts. As Certified Financial Planners ®, our clients often ask us to help them work through such issues. When working with clients who find themselves in the midst of a difficult family dynamic involving money, our process is to help our clients understand the impact of providing financial assistance to adult family members. Below we share a few of the conflicts we have found (Please note: identifying information has been changed for privacy purposes).
Joe, his wife Sharon, and their three young children are trying to build a life in an expensive city. Sharon wants to live in this city to be close to her family members, but they are unable to bring home the income necessary to cover the higher cost of living. Joe’s parents, wanting the best for their grandchildren, choose to support Joe and Sharon financially on a monthly basis. However, when Joe’s parent’s furnace stops working, their car needs major repairs, or a medical crisis arises, they do not have the money to pay these large bills. Therefore, Joe’s sister Jane steps in to pay these bills for their parents. Jane knows that their parents are helping to support Joe and Sharon and tries to talk with them about the impact their financial assistance is having on their own finances.
Mike is living his dream working at a ski resort in the mountains. His divorced parents, Tim and Sue, love to see Mike so happy after tough teenage years. Therefore, they elect to supplement his income in order to make his lifestyle achievable. However, Tim and Sue tend to use money to manipulate Mike. Tim is likely to give Mike more money when he spends more time with him and less with his mother. And vice versa, Sue is likely to give Mike more money when he spends more time with her and less with his father. Consequently, Mike learns to attach the value of a dollar to love that is given and received in a vengeful manner.
David and his wife Mary spent their working years building a nest egg and were enjoying retirement until Mary passed away. In order to stay busy as he worked through the grieving process, David involved himself in his son-in-law’s business ventures. His son-in-law, Sam, was an entrepreneur with grand business ideas. Sam needed financial help with these ventures and David had the funds to help as the initial investor. Unfortunately, one mishap after another, the business ventures failed. David felt guilty not supporting Sam and continued to invest his money until it was almost gone. Now in his elderly years, David is financially dependent on his children.
When faced with these tricky dynamics, we can help our clients by asking them questions about the impact of the situation. If you discontinued helping your adult family member(s), how would that impact your family dynamic? Do you have excess money to loan to family members without needing the funds paid back? Is your financial assistance truly helping the family member you are benefiting?
If you need an objective view on your family finances, consider seeking the assistance of a fee-only Certified Financial Planner ®.