From our earliest days most of us were taught to be generous, especially with those closest to us. But ironically, as we enter retirement and confront the need to be more fiscally cautious, our adult kids and grandkids are just coming into the phase of their lives when financial crises seem to pop up on a regular basis. During times of financial need, those we love may turn to Mom and Dad, Grandma and Grandpa for a loan or a handout, and when they do we may want to say yes – but should we? Are we in danger of becoming financial enablers?

Shut Down the Family ATM

We found this article on the USA Today website a little over a year ago, but the information is timeless and the warning extremely relevant. Written by financial planner Liz Weston, the article makes her view clear from the outset. It’s titled “How to stop being the family ATM and learn to say ‘no.’” If you think you might be a financial enabler for your family, read on.

It’s definitely good to be generous with our kids, we would agree – up to a point. But financial enabling, says the USA Today article, occurs when generosity has gone too far.  Unfortunately, Weston writes, some older adults are guilty of this distorted brand of generosity when it comes to family members. “Financial enabling” Weston writes “means giving money in ways that keep the recipients from taking responsibility and solving their own problems. It may include providing financial support to an able-bodied person who refuses to work, bailing a chronic debtor out of another financial jam or serving as a de facto emergency fund for someone who refuses to save.”

Financial Enabling Harms Both “Giver” and “Receiver”

While it’s true that this kind of toxic generosity can take place between just about any two people, financial planners agree that it seems most common between parents and their adult children. For retirees, financial enabling is a real double-edged sword: not only does it harm the one receiving the handout, but it also undermines the fiscal health of an older parent who’s trying to do the generous thing.  “[Financial enabling] can be especially problematic for retirees who may run short of money because of their generosity,” says USA Today.

If you think your so-called generosity has morphed into financial enabling, you need a strategy to say no and stick with it, argues the USA Today article. While this kind of resolve can be tough for many good-natured, well-intentioned parents, it’s essential that you stand your ground.  One psychologist quoted in the piece says that saying no and then giving in after persistent pleading is worse than saying yes in the first place, because by caving into persuasion you’re only increasing the odds that you’ll be a target the next time – the “family ATM” indeed! Stick to your guns, advisers say.

When “No” is Not Enough

But saying no and meaning it might not be enough, USA Today’s Liz Weston writes. She says it usually does little good to just tell the freeloaders no, since “few are willing to stop the behavior cold turkey, therapists and planners say.” Instead of a flat no, she offers these three questions to ask yourself next time you’re confronted with a family member’s financial need.

• First, will this money actually help? Weston writes that “It’s one thing to aid someone who’s been financially responsible but has fallen on hard times. It’s another to give money to people who chronically overspend or under-earn.” You’ll never help them change their bad financial behavior if you keep bailing them out every six months. There are almost certainly larger money management issues at work that will never be solved by your excessive generosity.
• Second, is there a better way to help? “Instead of handing over cash,” the USA Today article suggests, “the rescuer could offer to pay essential expenses such as rent or medical bills if they can afford to do so.” What’s more, any financial help needs to be accompanied with a firm deadline so the beneficiary knows when the assistance will end. We also like the idea of offering to find or pay for financial planning, therapy or coaching for the loved one who is in chronic financial distress.
• Third, how can you make this decision stick? You don’t know how your adult child might respond once they realize they’ve been cut off from your bank account. They may throw “adult temper tantrums,” says Weston, or lay a guilt trip on you or threaten to move away. In the worst cases there may be danger of verbal or even physical abuse. The article suggests you call in outside reinforcements for support if you need to, including an attorney, financial planner or therapist. “You can say, ‘Sorry, I want to help, but my financial planner says it just isn’t possible,’” writes one expert in the USA Today Whoever it may be, you need someone who will act as your advocate to let your loved one know you mean business.

A Family Conference is a Great First Step

Here at AgingOptions we have a strong recommendation for you: no matter what your family circumstances, we urge you to contact us and arrange for a family conference, under the guidance of one of our staff professionals. By having this type of organized, comprehensive family conversation early on, you can nip many problems in the bud, getting everyone on the same page when it comes to your needs and expectations – and their responsibilities – as you age. And if necessary, this gives our staff the chance to spell out for your adult children that your financial needs in retirement are of paramount importance, and you can’t afford to be bankrolling their bad spending habits. Contact us soon and let us discuss the benefits of a family conference. It could be one of the most important retirement decisions you’ll ever make.

And for a broader review of a full range of retirement planning strategies, we invite you to come join Rajiv Nagaich at an AgingOptions LifePlanning Seminar. You’ll discover the benefits of the comprehensive approach to retirement that we call LifePlanning, blending financial, legal, housing, medical and family issues and plans into one seamless blueprint. A LifePlan from AgingOptions is your key to the retirement you’ve dreamed about. Click here for details and online registration, and then register for the free seminar of your choice. Or if you prefer, call us for details and assistance during the week. We’ll look forward to meeting you soon!

(originally reported at www.usatoday.com)