When you Find Yourself Paying for Your Parents’ Financial Mistakes
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Politics. Religion. Money.
These are things you don’t talk about at the dinner table. But if you were like my family we didn’t talk about them at all, maybe religion on Sundays and politics every four years, but money? Never — children should not be burdened by the family finances, especially their parents’ financial mistakes.
Fast forward to March 2017: I’m 27, married, and just bought a house. My mom dropped the bomb on me that she’s being foreclosed on in less than three months. She also shares that the process has been going on for nine years but got serious eight months ago.
I was in complete shock.
To put it into perspective, I’ve spent the last 5 years trying to help my mom with her finances. I knew they’d gone downhill since my dad’s death in 2006 but had never got a straight answer. I bought her easy reads on retirement and increasing income, I sat with her through Financial Peace University (while this situation was escalating) and suggested she sell my childhood home for something more affordable.
I asked her questions and the answers never fully added up. She offered to give us her washer and dryer for free saying she’d rather use the Laundromat. She asked to take the boxes from our recent move for a random friend. I even saw her house on Zillow while we were looking to buy and it read “in foreclosure.” She said the website was incorrect.
When she did finally bring me up to speed on what’s going on, a scenario that could’ve just been an inconvenience if we’d worked together on it years ago is now a mess that I have to clean up. Because of this culture of “we don’t talk about money” She lied to me and made things so much worse.
Millennials are at a point where in order to take care of ourselves we have to start thinking about taking care of our parents, whether they deserve it or not. It doesn’t mean I’m letting my mom move in with us or paying her future rent, but I’m establishing habits now so I’m protected in the future.
Start Talking
To hell with the idea that “polite adults don’t talk about money.” I think we should talk about money everywhere. If you can’t talk about it at home where are you supposed to talk about it? In fact, you’ll probably need to hire a therapist if you don’t so save the money by starting open and honest conversations now.
Sure there are ways to look like a jerk talking about money but there are also constructive and lighthearted ways to do it. I believe the best way to encourage someone to develop better habits is to talk about your own wins and losses. Like “I made a big student loan payment this month” or “I forgot a bill and totally screwed up my budget.”
They might think you’re weird at first but remember this saying that I love: “at first they’ll ask you why you’re doing it, then they’ll ask you how you did it.”
Establish Boundaries
Some parents are travel agents for guilt trips. Passive aggressive text messages, reminding you how hard it was to raise you, and assuring you “this is the last time they’ll ask you for money and they will definitely pay you back this time” are just a few of the lines I’ve heard personally and from friends.
Know that their financial situation is in no way your fault. No matter what it cost to raise you, if they put you through college or if you still live with them, their money is NOT your responsibility. Parents give their children money, credit cards, and other material items of their own volition (whether the amount is appropriate is another topic entirely.)
Don’t be bullied or guilted into giving more than you’re able. Prioritize your financial and emotional state then give your money and time accordingly. And don’t feel pressured to give money directly to your parents. If they need a bill paid or something then you buy it or pay it. This way you know where your money is going and that you’re getting the best deal.
If you want a good book to read on this subject I highly recommend Boundaries by Henry Cloud. It covers boundaries in relationships, family, work, etc. If you feel overwhelmed and overworked, you might benefit from it.
Give Some Grace
Our parents get a lot of financial flack for the recession, with good reason. But so many were suffering from a lack of financial knowledge that wealthy companies were capitalizing on. To an extent, I think millennials can relate. We’re labeled as having a collective poor work ethic and entitlement when in reality we had to start from a point far from the platform baby boomers launched from.
I love this article by Sarah Kendzior on Quartz about the myth of millennial entitlement being created to hide the mistakes of our parents. It’s not all pointing fingers, she explains instead of the media vilifying each generation, our struggle is actually the same.
“There are plenty of older people with few retirement savings, with their finances drained from paying for both elderly parents and jobless children. We need to acknowledge the way our struggles are intertwined, instead of allowing the media to stoke manufactured class and generational resentment.”
-Sarah Kendzior
So while it’s ok to be angry, give grace to your parents. Their generation was much more isolated, openly judgmental, and oblivious of what was to come in 2008. We all have our own struggles and while they are different they often have similar root causes.
Break the Cycle
In the end, you can do all these things and see no positive changes in your loved ones. The only person you can change is yourself. If you break the cycle in your own family, you’ve won. Even if you have to pay for your parents’ financial mistakes, your children won’t have to pay for yours.
Jeff Rose, a financial planner, author, and blogger behind Good Financial Cents explains how to not make your parent’s financial mistakes. One way is to educate yourself on finance through classes and blogs. There’s no shame in purchasing a course about money management. And if your family won’t listen, talk about money with your friends, you might find it’s less awkward than you’ve been led to believe.
Have you experienced financial stress due to a parent’s mistake? What have you done to break the cycle?
Photos from Unsplash.com
Jen Smith is a personal finance expert, founder of Modern Frugality and co-host of the Frugal Friends Podcast. Her work has been featured in the Wall Street Journal, Lifehacker, Money Magazine, U.S. News and World Report, Business Insider, and more. She’s passionate about helping people gain control of their spending.
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This post hit close to home for me. My mom was and still is notoriously awful with money, it led to her and my father’s divorce. She helped me with all of the college applications and FAFSA and navigating the loans. During my second year, her and my step dad were in a rough spot with their finances and she asked if I would take out a student loan for more than I needed and give her the money. I was given the same guilt trip; it was so difficult and expensive to raise you, I’ll pay the payment when it’s due, blah blah blah. Fast forward 4 years when I’m in repayment. She paid the payment for about a year and then decided she didn’t need to anymore because ” I owed her”. Now, I am stuck paying the minimum payments on my student loans and accruing interest . I have tried to move and tried to help her make more sound financial decisions (like not leasing a vehicle) but she doesn’t listen. It’s the definition of being stuck between a rock and a hard place. If it weren’t for my dad, a successful farmer and business owner who is great with money, I feel that I would be wandering down her same lost road.
I’m so sorry to hear that. But the future is so much brighter now that you’ve seen what that looks like and you know how to do it better! We can’t change our parents but we can protect ourselves and out future. Good Luck Daisy!
It’s true, talk to your parents about money. I am trying to do it as well, on some days it’s easier and on some days we don’t discuss much. But you just have to keep trying and hope they will get more comfortable with it. You’ve given some great tips Jen and I hope your situation improves!
Thanks so much T!
Great post! This is such an open and honest look at problems so many people face. My husband and I talk all the time about our parents and their bad financial decisions. However, we have yet to actually sit down and have some open and honest conversations with them. Thank you for sharing not just your testimony, but sparking me to start the conversation with my own parents. I will be sharing this with my husband as well.
Thank you Ayanna! I hope it moves your family in the right direction!
Thankfully both my parents and my husbands have been wise with their finances. I so agree with you about breaking the silence. We went through Financial Peace University right after we got married, and it was the best thing we could have done for our finances. We’re already talking about how we’re going to teach our children to handle money appropriately.
That’s awesome Christine! And so encouraging to hear. I hope they know know how blessed they are!
What a difficult situation to navigate! Many years ago, my friends parents let it slip at almost the last possible second that their house was going to be foreclosed on. Luckily, he was able to pack them up and get them into a new place, and short sale the house before it went into foreclosure. He was so angry he only had a couple weeks to arrange everything, if they only told him sooner it could have saved everyone involved a whole lot of stress.
My partner and I openly talk about our finances in front of his son. We want him to know that when we do splurge, it means we don’t get to do something else-that each choice we make affects us elsewhere. It’s not that we’re rich, it’s just that we choose what to spend our money on.
It’s so important to establish that difference. I’m glad to hear you’re teaching him to balance splurging and saying no!
I can understand how the silence can become more and more difficult to break. Such a difficult situation, good luck with it 🙂
Thanks Katherine.
These are some great tips. I am so thankful that my parents have given me such an amazing example of how to handle money.
Thank you Anne, I hope you pass it on!
In the last few years I’ve come to take over the investment aspects of my mothers financial life. She has done things in the past like sell everything at the bottom of the market which has truly hampered her savings. That being said she has a pension to save her as long as she manages it properly going forward. I’m glad I got involved when I did because she was about to cash out the pension and invest it using her same methodology.
Oh man, that stinks. But I’m glad she let you take it over!
It’s tough.
I always say, “You can’t tell your kids or your parents anything.” Which means they both think they know more than you do — though for different reasons.
My parents are doing “ok” and we’re working with them to try and get to retirement (I retired at 52 last year). It’s like pulling teeth to get them to share anything personal about their money, which makes it hard to put together a retirement budget.
I think most of it has to do with the fact that we are doing “better” than they are — whatever that might mean. It’s not like it’s a competition, but I think they feel like they’ve done worse than we have which is tough for them. They should be celebrating the fact that they prepared me to do well with money. I’m hoping my kids do much better than I did.
Anyway, it’s a work in progress.
I feel the same way. I would never rub it in my mom’s face that we’re doing well financially but just the sheer fact that we are, makes her insecure. But congrats on your retirement! You deserve it and I hope your parents open up to you more.
This article was confusing for me. I understand you love your mom and wanted to give her advice and help. But I don’t understand your conclusion: “a scenario that could’ve just been an inconvenience if we’d worked together on it years ago is now a mess that I have to clean up. ”
Why exactly do you have to clean it up? She goes into foreclosure, loses the house. Rents an apartment or something. Not to be heartless, but she saw this coming. Also, cleaning up the mess for her won’t really help her at all – she won’t learn anything, will keep making these mistakes, and you will feel resentful when she’s not taking your advice. Its not like she’s dying. This article should be called “What to do when you FEEL LIKE YOU SHOULD pay for your parents financial mistakes.”
I left out a few details for my mom’s privacy but there is more to the story, stuff that could have been avoided if we’d worked together from the start. I’m not cleaning up financially, more emotionally. I’m not fixing things for her but I am walking through it with her. I’m choosing to do that because I feel like I should but also because I’m human and I empathize with her. The amount of energy, anxiety and emotional toll this can take on a person is more expensive than any check I can write.
That makes sense, Jen. Emotional support really is priceless.
My parents are not Baby Boomers, they belong to the previous generation. I am finding that my parents were good with finances AND they were not good enough. What they did not plan for was my father having a catastrophic stroke at age 64. For the last fourteen years my mother has been his primary caregiver. They have three rental properties and they rely on this income and their social security to live. It is a lot for my mother to manage the rental properties, their own home, and my father’s care. Could my parents sell the rental properties? Yes. And if they do, they worry about what happens when that money runs out. It is likely that my father will need to move to a nursing home a some point. (Some of my family members would argue that the move should have happened some time ago). Research has shown that nursing home care will cost approximately seven thousand dollars per month. Even though they have not asked, I am already putting money aside to help with the expenses.
Ugh Chris, I’m so sorry to hear that. It sucks that even those good with money can’t predict something like this happening. They’re lucky to have a son that’s in a position to help and that you’re willing to do it. I’ve considered taking out a long term care policy for my mom once we pay off our debt for just that reason.
Thank you for this post – it’s a much-needed reality check for me at this moment. I am subsidizing my dad’s housing and utilities because he literally has nowhere to go and no one else to turn to for financial help. Last summer I realized he was paying 24.9% interest on a crappy used car from a sketchy dealer, and made the executive decision to pay it off out of my emergency fund. It was just a few thousand dollars but it has made an enormous difference in his monthly budget. Sounds cliche, but it practically meant less worry about having to choose between food and medication.
His multiple divorces, bankruptcies, and health issues have been difficult enough, but it’s his refusal to ask for help until it’s too late that has been the most infuriating icing on the cake. Then when my wife and I change our plans to help my father, other family members (with retirement pensions and new cars, of course) chime in that I must be making a fantastic income if we can afford to do all that. Nope, we are just paying attention and adjusting our priorities accordingly. You just can’t win sometimes. (My wife is a saint, by the way, and works hard to remind me of many points you make in the article, including setting boundaries and realistic expectations. Many thanks to the saner voices in our lives!)
You guys sound fantastic. It’s so good to hear from others setting boundaries and still being gracious and aware. Thank you for sharing your story!
This is the first time I’ve read a PF article endorsing Henry Cloud’s amazing book “Boundaries”. I think it’s a very valuable read for anyone trying to get their financial ducks in a row or live within their means and have friends and/or family that try to sabotage your financial health. It’s so important to have boundaries, not to keep people out but to keep yourself safe (paraphrasing the book here).
Well done, Jen, for a great reference and a thoughtful take on a seldom talked about subject!
Thank you so much Caron! I couldn’t agree more about Boundaries. It’s been a great help to us while paying off debt.
Thanks for sharing your experience, Jen, and probably spurring a lot more people to have these discussions with their parents. It’s also vital to have these conversations for another reason: If your parents die and you’re left in charge, it’s much harder to do forensic accounting and track down miscellaneous financial papers than if you have an honest conversation in advance to know their financial details, make a plan of action, and have your “power of attorney” duties figured out. I cannot stress the importance of estate planning enough, even if “estate planning” means “tell me where your money’s parked and how it’s set up.” That advance notice will make a huge difference in time, emotional strain, and confusion during a period in which you’re already grieving.
OMG Rachel, Yes. People are so afraid of estate planning because they equate it with their death, but it’s to benefit the emotional well-being of your children. Thank you so much for sharing this perspective.
Simple, don’t. Yes, expect to wrestle with the emotional ups and downs; it seems unfair and cold; and there are always extenuating circumstances and a tough call to make. So what do you do instead? Say you were doing financial planning in case of your death and was wondering who your parent wants as their executor…this crack the door. Parents with financial issues are in quicksand or mud due to a combo of pride, ego, shame, desperation and ignorance. You and they don’t know what you don’t know. This is partly because it changes as government and companies continue to devolve all financial burdens to individuals over the years and onward. Looking at the posts…I recommend bogleheads.com is a great wisdom forum about many financial issues. Long-term care be careful. It is really for middle class with some significant savings. Medicaid covers poor parents, rich do self-pay and LTCI does take into account pre-existing conditions. LTCI may pay off if bought when healthy and young but you basically are preparing premiums for it. Check out Medicaid and VA if a veteran for LTC. Charity and government benefits…explain EBT (food stamps); senior HUD housing, etc. are not charity. Parents paid taxes in and it is a safety net return on investment vs charity was voluntary payments. In fairness to parents, they did not have the on-line tools you have today. What you do now 20-30 years out will probably determine your old age lifestyle. What you want to see for them may not be what makes them happy…their freedom. As they age they will make more mistakes because they are still human and thinking may decline as they fall for scammers. I would recommend: benefits.gov inventory; maximize my social security (small fee); intentionalretirment.com; moneyover55.com (she as a great planning book); look at your local agency on aging for other potential benefits. Keep teaching them how to fish just like you are learning to do. Hope this is helpful. Oh, and set aside funds for their funeral (cremation is cheaper).
Thank you for these resources Bob, I’m sure they’ll be useful for me and other in the future.
Paying for your parents’ financial mistakes is one of the things adult children want to dodge at all cost. One effective way is by talking about your parents’ finances. It’s off for most people but really this one of the best things you need to do if you have to attain financial freedom later in life.
I think it’s best to take one step at a time and make this conversation about your needs. I mean, aging parents don’t want to become a burden to their families so I think this is one trick you can try when talking about money with your parents.
Absolutely. That’s the way I’m approaching it and even though she was in denial of the burden it’ll cause me and my husband, I think now she’s seeing it. Step-by-step.
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This hit close to home for me. We never talked about money growing up, and as someone who’s done well financially myself, it’s hard to talk about our success with our parents without feeling guilty (because we’re retiring before they do). Thank you for sharing a vulnerable story, and I’m subscribing to your blog now b/c I want to read more!
Thank you Kim! I’ve learned a lot in the last few years about how to talk with my mom about money. I think I’ve made every mistake someone can make! But we’re doing a lot better now. The biggest lesson for me was to include her in our retirement planning.
Thankfully my parents aren’t like this but I have a brother that is a huge mess with money. It contributed to the breakup of his marriage and his credit is destroyed. He was fortunate to get into an apartment last year when he went through his separation and I told him then that no matter what, he needed to be sure his rent was paid on time and in full every month to start building his credit back. Guess what? He’s temporarily homeless and struggling to find a place to live again because he didn’t do what I told him and the apartment wouldn’t renew his lease. Sigh…It’s hard not to feel resentful when he’s constantly asking for help because I feel like he never learns his lesson and I’m being punished for handling my money wisely and always having to bail him out. And when I do bail him out it’s only because he has kids and I don’t want them to pay for his mistakes.
oof, sorry to hear that. It’s such a tough road to navigate.
Wow. What a tough topic!
I was completely onboard, then you said this, “Some parents are travel agents for guilt trips. Passive aggressive text messages, reminding you how hard it was to raise you…”
BAM! You hit me between the eyes! You are so right! Excellent article!
Thanks!