MASON CITY, Iowa (KIMT) – Six out of 10 parents end up helping their adult children financially and according to a recent study, many parents find it rewarding.
But how much help is too much?
Ten Haken and Mary Church didn’t know each other till Tuesday, until they were asked if they’ve ever received money from mom and dad as an adult or handed it out.
“Maybe if I was having vehicle issues, that’s been a problem in the past, typically my dad is the one who helps me out with that kind of stuff,” Haken said.
“As far as my own plan for helping them, I gave them that chunk of money right after high school and played along with them as time went on,” Church said.
Haken has received money from her parents. Church has given money to her children. They’re both somewhat okay with that.
“I’m very much someone who really wants to be able to depend on myself and be independent. It’s a lot for me to ask my parents for help,” Haken said.
“I just did the best I could do and they were usually content with that,” Church said.
A recent study shows giving money to your adult child usually goes two ways: either it’s in a special circumstance or it’s toward recurring issues: rent, childcare costs, and home repairs. The research found parents with higher income levels gave out more money to their kids.
“If you’re looking at their finances and saying we have to give up this to help our child, they just have to have a really honest conversation like you always do about finances,” Marty Walsh an financial adviser with Edward Jones said.
Setting limits when it comes to forking out that cash isn’t terrible. Financial experts suggest if they aren’t trying to find a job or help themselves, don’t give the money out.
Say you’ll help a little, but then they’re on their own.
“Teaching them to prioritize their spending and keeping them out of debt whether that is with student loans, auto, credit cards, being proactive in making sure the child doesn’t put the parent in a situation where they do need the money,” Walsh said.
If you gift over $14,000 to anyone in one year, you are asked to fill out a gift tax return. Doesn’t mean you’ll pay extra taxes because of it, the government just wants to know.