Are You Helping Your Adult Children Financially?

In 2015, Pew Research investigated whether aging parents received more assistance from adult children or adult children received more assistance from parents. In the United States, Italy, and Germany, they found parents provide more financial assistance to their adult children than the adult children provide to their parents.

The survey found 39 percent of American parents had helped their adult children with errands, housework, or home repairs during the past twelve months, and 48 percent had helped with childcare. Almost two-thirds had provided monetary support. Financial help appeared to be contingent on parents' circumstances. Those with higher household incomes were more likely to give money to adult children.

Becoming the 'Bank of Mom and Dad' can be a slippery slope, according to AARP Magazine. Since parent-child relationships can be emotionally fraught, it's sometimes difficult to gauge when financial assistance is a good idea and when it's not. Should you pay for a car repair? Help with the down payment on a home or apartment? Foot the bill for a grandchild's private school or college? Fund a lavish wedding? Help with medical bills?

The AARP suggested answering four questions, using a scale of 0 to 5, may help parents determine whether to give money to an adult child. The questions are:

Will this investment add stability and security to my child's life? (0 = entirely optional; 5 = absolutely necessary)
Is this a short-term or one-time cash need, or is it something that could go on for years? (0 = guaranteed, long-term payouts; 5 = absolutely just one time)
Is there risk in the investment beyond the cash outlay, such as financial liability on a contract or damage to your credit? (0 = very high levels of risk; 5 = no additional risks)
Can you lend or give this money without fear of damaging your relationship with your child? Or, will it cause tensions or resentments for the people involved? (0 = guaranteed tensions or resentments; 5 = everyone is happy)

If the combined answers total 13 or higher, the answer is yes, give money to your adult child. If the total is less than 13, you may want to think twice before opening your wallet.

Comments

Womack Weekly Commentary: September 18, 2017

Womack Weekly Commentary September 18, 2017 The Markets “In theory, there is no difference between theory and practice, in practice there is.” Yogi Berra was talking about baseball, but the concept also applies to diversification, according to the GMO White Paper, The S&P 500: Just Say No . From the title, you might think the authors – Matt Kadnar and James Montier – don’t like U.S. stocks. They do: “Being a U.S. equity investor over the past several years has felt glorious. The S&P 500 has trounced the competition provided by other major developed and emerging equity markets. Over the last 7 years, the S&P is up 173 percent (15 percent annualized in nominal terms) versus MSCI EAFE (in USD terms), which is up 71 percent (8 percent annualized), and poor MSCI Emerging, which is up only 30 percent (4 percent annualized). Every dollar invested in the S&P has compounded into $2.72 versus MSCI EAFE’s $1.70 and MSCI Emerging’s $1.30.” The au

Another Tornado Record's in Sight for U.S. as Thunderstorms Boom

Bloomberg by Brian K Sullivan Another wave of tornado-spawning thunderstorms is set to rip across the Great Plains and South this week, putting the U.S. within reach of a record year for life-threatening twisters. Severe storms will drench a swath of the country from Texas to Mississippi over the next five days, according to the U.S. Storm Prediction Center. Through Thursday, 369 tornadoes have been reported across the country, the most in five years and more than double the normal number of sightings. An active jet stream and unusually balmy weather are to blame for the burst of deadly tornado activity, the storm prediction center said. Strong winds have dragged storms into the warm, humid air that’s blanketed the eastern half of the nation, creating conditions ripe for a weather phenomenon that leads to at least $400 million in damage a year in the U.S. “We have a severe threat starting today and continuing for each of the next five days through at least Monday

Pandemic-Driven Demand Is Providing Fuel for Investors

For four weeks, the U.S. stock market has sparked and sputtered like a campfire in light rain. Today, pandemic-driven demand is providing fuel for the investors. The need for certain types of products and services has accelerated and innovation is creating new opportunities. Consider: · Technology . Today, digital technologies support nearly all group interactions, which has accelerated innovation. Traditional video communications platforms are in high demand, and multi-person virtual platforms are emerging. Robotics innovations are racing ahead, too. Robotic dogs enforce social distancing in Singaporean parks, reported Accenture. Other types of robots sanitize streets and facilitate contact-less delivery around the globe. · Consumer products and services . COVID-19 increased demand for staples, cleaning, and personal hygiene products. The virus may have inspired deeper and longer-lasting changes in consumer behavior, too. Accenture reported people are favor

Womack Investment Advisers

Search This Blog