6 Do's and Don'ts for When Your Retired Parents Ask for Financial Help
So what happens when you find out that the people who taught you to ride a bike and walked you down the aisle at your wedding haven't saved enough for retirement? How can you help your parents without hindering your own finances? Here's a list of do's and don'ts when it comes to helping your parents navigate retirement:
1. Do Make Your Position Clear
If your parents are coming to you for help, they may have certain expectations. Before agreeing to anything, sit down -- with your spouse, if you're married -- and decide how to best help them without risking your own finances. After you've settled on a course of action, clearly communicate to your parents exactly how much you'll be able to do. Make sure to establish the ground rules from day one to avoid misunderstandings down the road.
2. Don't Put Your Own Household in Jeopardy
While you may think you have the extra money to prop up your parents' post-retirement lifestyle, first, consider your own family's needs. Have you paid off your own debts? Do you have an emergency fund? Are you saving enough for retirement? How much do you have saved to put your children through college? You should have your own household's financial ducks in a row before you consider helping anyone else.
3. Do Help Them Set Up a Budget
While your parents may only be hoping for monetary assistance, you should start by helping them set up and stick to a budget. It's often easier for an outsider to look objectively at expenses and see where money can be saved, so walk through their monthly budget with them to see what cost-cutting options your parents may have overlooked.
4. Don't Give Them a Credit Card
Giving your parents a credit card may seem like the easiest solution, but it could also be the most detrimental. If overspending occurs, it's your financial well-being on the line. Further, a blank check or open credit line might create a feeling of entitlement. And if you ever have to withdraw your help, it will mean actively taking away their access to that credit line -- which could put extra strain on your relationship.
5. Do Give Where You Can
This isn't the time to teach your parents a lesson. In all likelihood, they spent lots of time, money, and energy on helping you become who you are today. Be generous where you can and don't expect anything in return.
6. Don't Stop Saving for Your Own Retirement
This is crucial: Make sure to keep setting aside as much as you can for your own retirement, even while you help your parents through theirs. While the immediacy of your parents' financial troubles may seem like the most urgent matter at hand, you can't stop investing in your future. Otherwise, you might find yourself in a similar situation down the road. So if you have a hard time saving for your retirement, do it for your children's sake. Someday, they'll thank you.
Joanna and Johnny are the writing duo behind OurFreakingBudget.com, a personal finance blog documenting the joys, pains and realities of living on a budget.
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