Editor’s Note: Parents aren’t the only ones that get hit up for money, grandparents do too and by both the adult child and the grand kids. As our friends at http://mom.me/ shared with us, there is a good way and a bad way to go about making this decision.
Lending money is never easy. Here are a few tips for parents and grandparents to delicately (and lovingly) help out without hurting their relationship in the long run.
- Research the situation – Ask critical questions of your grandchildren like: Why is the money needed? Does your grandchild have credit issues? What is the exact amount?- and get it in writing.
It’s okay to say this will be messy, but be sure to look at all the options and possible perspectives. If your grandchild is short on cash to cover credit card payments for irresponsible spending, it’s not up to you to bail them out.
- Get honest about your own financial well-being – Grandparents need to make sure they can afford to give the loan- secure your own finances before you can help your g-kid. If you’re not on track for retirement, or you’re paying off high-interest debt, then you simply can’t afford to bail out your grandkids.
This is also a prime opportunity for grandparents to be accountable for how they’ve taught their children and grandchildren to manage money and get to the heart of why they now need a loan.
- Make It Official – Start with a simple promissory note (You can download one for $15 at nolo.com)-and charge a small amount of interest, too.
- Get tough about getting the money back – If a grandchild misses loan payments, it’s time for a tough talk and a budget review. Online resources, like those at mint.com, can help track monthly expenses. If your grandchild thinks a loan from grandparents is code for “gift,” get tough.
- And then … give up – The fact is, every time you loan money, there is a chance you’ll never see it again. If you’re not comfortable with that, financially or emotionally, then consider that before you sign the first check.
For more tips, please visit http://mom.me/parenting/253-should-you-lend-your-adult-child-money/?p=1–