What does having financially irresponsible parents sound like? ‘My mother blew through a divorce award, an inheritance, and lost several assets. Now, she lives with me, and I have to provide for all her needs. I am tired and straining my relationship with my husband.’
‘My father keeps asking for small loans from me, which he promises to return but never does. He has his source of income and probably earns more than me, but it’s never enough.’
My parents keep asking me to send them money and often say I am not a good son for sending them too little. However, I have my own needs that I need to take care of. What should I do?’
In a past workshop, these were the resigned responses from some participants when asked why they were finding it difficult to achieve their financial goals. The question is, are we obligated to take care of our financially irresponsible parents?
It’s a fact that some parents are so financially irresponsible they become a burden to their adult children. Apart from creating a financial nightmare, it also strains the relationship between the parents and the child.
With 64% of Americans expected to retire with less than $10,000 in their retirement savings account, many adult children will have to fill the gap. Because your parents were there for you growing up, you may feel obligated to take care of them. However, having financially irresponsible parents may leave you feeling overwhelmed and wondering whether or not you should care for them financially. Or you may wonder how to talk with them, and if and how to help.
Helpful tips to help you deal with financially irresponsible parents:
Determine what you are capable of doing
Start by figuring out whether or not you are in a position to provide for your parents. Your top priority should always be your nuclear family (spouse and kids). You don’t want to be the parent that asks their kids for money in the future!
As the first-born son in an African home, my husband is culturally obligated to support his extended family financially. This phenomenon, commonly referred to as the ‘black tax,’ lays a massive burden on our shoulders. However, to ensure we don’t drown in responsibilities, we consciously put our family first and treat these other demands as corporate social responsibility (CSR). Companies do not give all their profits to charity. Why should we?
To balance your sense of obligation to your parents and still meet your financial goals and successfully build wealth:
Determine your cash flow: How much do you earn each month, and how are you spending it? Separate all expenses into various categories, including living expenses, savings, investment, and CSR). Once you get a summary, ask yourself if you are meeting your financial needs appropriately. How much did you give out as monetary support? How was that money spent? Asking these questions will help you determine what you can do.
Determine your financial priorities: What comes first? The best way to determine this is to assess your current financial situation.
How much money do you have in savings, how much debt have you accumulated, and are you actively paying it? What are your financial goals, and are you on track to achieving them? After determining your financial goals, analyze the needs of those you want to help.
Create a budget: If you think your parents will need financial help in the future, be proactive. Budget how much you can put away, so you are ready when the time comes.
Talk and plan with other family members
Once you have figured out what you can do, the next step is to involve other family members who may also support your parents financially. The aim is to establish a team dynamic and get everyone on the same page in acknowledging and addressing the problem. If you’re an only child, try to talk to a friend or other close family member if you need moral support.
Everyone must be clear about what they can and cannot do to establish the best course of action. For example, if someone can cover some utilities, then the responsibility should be left to them. When it comes to housing, if one sibling has a spare room where they can accommodate your parents, the others can chip in to cover groceries and medical expenses.
These things need to be discussed and agreed upon without involving your parents to ensure that you have the most objective discussion possible. Also, parents being present during these conversations can create unnecessary hurt feelings.
Cover all possible angles before bringing the financial assistance strategy to your parents to ensure you set yourself up for a better conversation and, in turn, a better future.
Have “the talk” with your parents
If you think this talk will go wrong, you are probably right. It might even be worse than how you picture it in your head. However, even if you know it won’t be easy, it must be done. The key is to be calm, firm, and direct.
Your number one goal has to be to create a plan that works well for everyone and gets your parents headed toward a better future. It would be best if you establish some conditions, such as financial transparency, to ensure you don’t end up enabling their bad decisions. Often, one of the biggest challenges is having them acknowledge that they may need help with their spending.
Always remember that their lack of planning will eventually affect you and your future. Hence, it’s okay to point this out during your meeting respectfully. Your role isn’t to control them but to offer help. However, you also have a right not to help if you feel they are not taking you seriously or if helping them will harm your financial health.
The main aim of this conversation is to:
Set clear boundaries and expectations
Offer solutions instead of cash: Instead of sending money for medical expenses, opt to get them medical insurance. For home repairs, bring them home repair insurance.
Avoid co-signing or giving them loans: The rule is never to give family members or friends loans, as it may breed resentment and conflict if they cannot pay you back. Instead, offer a gift amount that you can afford to lose.
Prioritize your future
Let’s face it: life is unpredictable, and caring for your parents comes with a hefty price tag. If you’re considering sacrificing your financial well-being to support your parents, consider this: if something were to happen to you, would your financial legacy continue to support them? What if you didn’t have the means to manage it?
The point is you should prioritize not only your parents’ financial well-being but yours as well. After all, taking care of yourself is just as important—if not more so—than sacrificing for someone else.
Financial sacrifices that people make to support their parents
It would be best if you didn’t use your down payment on a house or college fund for your kids or sacrifice your retirement to support your parents. Instead, prioritize your future to break the cycle of parents relying on their child in retirement. Plans to offer assistance should not come at the expense of your future.
Alternatives to monetary support
If you cannot offer monetary support, you can provide non-monetary support. These include helping your parents downsize, guiding them through a relocation, asking them to move in, creating a budget, helping with repairs and maintenance, etc.
Also, take advantage of any opportunity available to help reduce your financial burden from supporting your parent. For example, if you are paying more than 50% of your parent’s expenses, you can claim them as a dependant and qualify for tax breaks in some states.
The bottom line in dealing with financially irresponsible parents
Navigating family and money problems can be quite a hassle. The most crucial step is to sit them down and identify what they need to get out of the current situation. Then evaluate your capacity to help to find what works best for everyone. Remember, as much as you want your parents comfortable; it doesn’t have to come with your head on the plate. You don’t have to sacrifice your future!
Nyamonaa Agata is a content writer specializing in creating value-based, search-engine-optimized content for informational and marketing purposes. With over five years in the banking and financial services industry and an MBA, she has an extensive background in writing on personal finance, investment, fintech, B2B, and B2C topics