Should I Keep Loaning Money to My Adult Daughter?

Filed under: Relatives, Empty Nest, Relationships, Expert Advice: Just For You, Expert Advice: Family Time, Expert Advice: Home Base

Dear AdviceMama,

I've loaned $5,000 to my grown daughter (she's in her 40s). She has also borrowed money from her sister and stepmother in the last year and a half. She has two homes, one that she and her family live in and a vacation home in the mountains. They had their motor home repossessed and are having a hard time making car and mortgage payments. I am about to retire and I really don't want to give them what I have saved towards retirement. Also, I think it wouldn't solve the problem -- it would just be a temporary fix. Of course, she's not too happy with me right now (she has hinted at needing another loan) and I feel bad. Thanks for your input.

Reluctant ATM

Dear Reluctant ATM,

I'm sure you've heard this many times, but it's true: Don't lend money to relatives unless you're in a position to part with it forever. While I'm sure there are exceptions, I can't count the number of conflicts I've seen between family members over borrowing -- and repaying -- money. The loaner says, "You told me you'd repay me in February and it's August!" while their adult son replies, "Well you obviously you don't care about your whether your granddaughter gets to go to preschool!" And on it goes ...

No doubt your daughter intended to repay your $5,000, but if she's in over her head -- which sounds like the case -- you are definitely going to be at the end of the line when it comes to how she pays off her financial obligations.

Given the fact that you're about to retire, I wholeheartedly support you in deciding not to loan your daughter more money. You deserve to benefit from what you have worked hard to put away for the coming years so you can take care of yourself.

And I agree that simply handing over more money will not solve your daughter's problems. It could even prolong them by postponing the inevitable time when she and her husband take stock of their assets and liabilities and start living within their actual income.

But keep in mind that there's a delicate and indelicate way of letting your daughter know that she cannot expect more bailouts from you. Avoid lecturing her about how she has handled her money. Your harsh words will only further alienate and upset her.

Instead, empathize with her situation, and acknowledge how stressful it's been for her as she's tried to juggle everything on her financial plate. Tell her you're there to support her (emotionally) as she tries to sort out her financial challenges, but don't tell her what to do unless she asks for your advice! Be careful to avoid coming across as judgmental. Saying things like, "You shouldn't have bought that vacation house!" is not going to be helpful, and will only create more tension between the two of you.

If your daughter asks for more money, gently tell her, "I'm afraid that won't work for me, sweetheart." Then give her the room to express her disappointment without defending your position. Once she clearly knows what she can -- and can't -- expect from those who have been helping her financially, she'll be able to make decisions about how to get out from under her debt.

This doesn't mean you can't surprise your daughter or grandkids with an occasional check or bag of groceries. But let that be something you choose to do, based on your financial situation.

Yours in parenting support,

AdviceMama, Susan Stiffelman, is a licensed and practicing psychotherapist and marriage and family therapist. She holds a Bachelor of Arts in developmental psychology and a Master of Arts in clinical psychology. Her book, Parenting Without Power Struggles, is available on Amazon. Sign up to get Susan's free parenting newsletter.

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AdviceMama Says:
Start by teaching him that it is safe to do so.