A recent 2024 RBC Family Finances Poll surveyed grandparents 55 and older. It found that 54% were sacrificing their savings by financially assisting their adult children or grandchildren and that 52% had to make lifestyle changes to continue helping. Many grandparents feel increased pressure to provide assistance, rather than a basic desire to help. Sound familiar?
The family bank should assist, not enable. Here's how:
If this is a gift:
· Be firm on what your budget allows, and it can’t be ongoing
· Encourage them to build an emergency fund for the unexpected
· Request a budget outlining their expenses
If this is a loan, make a repayment plan with the following:
· How it will be used
· When it should be paid back
· Interest rate charged
· Monthly payment schedule
A loan is preferable over a gift; especially if they are married or common law as it can complicate issues if they separate. Question ‘cash-only’ gift requests.
Financial assistance can also include offering a room for a university student, lending your car for a short time, meal-sharing, paying for debt counseling, buying gift cards, and paying off a credit card balance. Suggest a visit to a financial planner.
Keep track of what you gave and to whom. Please do not get caught up with family members comparing themselves to others and what you gave them. Everybody's financial situation is different. Don’t make decisions based on emotion. Have frequent conversations outlining your expectations fully and encourage financial responsibility.
Lastly, consult your investment advisor before you become the new family bank.
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