How Much Financial Support to Provide for Parents

by David Ning · 20 comments

How much financial support do you give your family?

When Sara was born, we were already thinking about her college fund. I remember my wife asking me whether we should setup a bank account for her many months ago, but at the end, we decided to just write down how much she actually owns without setting up an explicit account.

These days, we just spend money on her as needed. “Honey, time to buy formula” and “the diapers are running out” are common phrases in our household. Though we no doubt added a few luxuries, like one too many hats that she never liked wearing anyway, or that pair of pants that she wore a total of 2 times because she already outgrew them by the time we put it on for the first time, we led our appreciation for a simple life guide us.

At the end of the day, we were living well within our means, and the decision to spend money on Sara was, as a result, trivial thus far.

What About Me Growing Up?

And I reckon it’s similar for my parents too. Though many parents spend quite a bit of thought on how to teach their children proper financial values (a subject we often explore in kids and money), quite often, the decision is guided by how much they could actually afford. Sure, the it’s a tough sell when it’s about a pack of gum on the way to the checkout counter, but as to that first car, it’s definitely not in the cards.

My parents provided everything for me any parent could possibly think of growing up. Our family weren’t financially rich in any stretch of imagination, but as a kid, I didn’t have a clue. School trips? Sign me up. Car rides home? Every single day. Fancy lunch boxes? You mean mine?

I didn’t get everything just because I knew how to say “I want” of course. I begged, screamed and probably said a ton of hurtful comments for a good half a decade because I wanted a car with a manual transmission. It went no where, but in general, I never felt deprived.

I was loved like no other, and the reality is that much of all the acts of affection cost my parents money. Money they could have spent shopping, money they could spend on vacations and money they could happily use in retirement.

Do You Offer Help to Your Parents?

When it’s your children, the decision to take care of them before they are able to provide for themselves is easy to make. I’d argue that if your parents are struggling financially, the offer to help them out financially is also trivial. After all, they probably spent years sacrificing just to make sure you grew up happily and without worry.

But what if your parents seemed fine on their own? How much (if anything) do you offer then?

Based on several impromptu and general discussions, my parents have solid finances. Sure, there is always a more luxurious zip code to live in or a fancier car to own, but there is no worries of meeting basic needs. For the most part, my parents don’t need my help, but it’s time to offer. I mean, if it wasn’t for my existence, my parents might very well already be living in that more luxurious zip code and driving that fancy car.

But how much? I’m young, and good times don’t always last forever. Just as parents don’t want to provide their children with too much because it sets them up for failure, does the same hold true in the other direction? If I start offering substantial financial support to my parents and it indirectly inflates their lifestyle, am I the person to blame if, down the road, I can no longer afford the same support and they the higher expenses?

Of course, much of this boils down to my own unique circumstance. The amount of support in question, the dependability of my income, and the type of people my parents are will all be factors in the outcome.

Let’s imagine for a minute that you are me. What would you do? And while we are at it, do you provide support to your parents, or in general, your family? How?

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{ read the comments below or add one }

  • jhg says:

    I once heard Dr. Laura say on her radio show that adults should raise their children to be productive adults so that they can care for their children when they have them. She did not seem to think that it should ever work the other way around. She felt that if you were grown up, you would take care of yourself, and your children until they are adults, not your parents.
    My mom always spent way more than was ever brought in. Now, she has a reverse mortgage, and is always hinting to me that she needs money. I do not feel that someone that always spent more than they earned should ever get anything in their old age from their children, because they weren’t responsible with their money. She is about to file bankruptcy again, and she is 74 years old.
    If she would have been responsible, and lived within her means, I may have felt a bit sorry for her, but I don’t, because she always spent so much, and she continues to do so.
    My husband makes good money, and we can have whatever we want, but, we live within our means. I will never feel sorry for anyone that spends more than they make.
    We only borrowed money once from my father-in-law, and he had a contract drawn up with the amount owed, and the interest that would be paid if it wasn’t paid back by the date he specified. That is what anyone should do if anyone wants to borrow money from them. Don’t let anyone take advantage of you.
    Adults should be capable of caring for themselves, and should not ask their parents for anything.
    So my response to the question posed (How much Financial Support to Provide to Parents) is: Don’t give your parents anything. It was their responsibility to raise you until you reached adulthood. You pay them back for that by raising your children to be good self-sufficient adults.

  • no name says:

    i helped my son buy a house and loaned him 50K for a home remodel. he refuses to pay it back because his wife-to be tells him it was his money anyway. I have gone beyond my means to put him through college, buy him nice furniture and now a home. He has said he doesn’t believe that this money was a loan and we did not have formal loan paperwork because I never thought anything like this would happen. You folks talk about how kids should help parents in return for everything we have done for them. Talk about the ungreatful, selfish grown kids who will never give back. BTW, I am also footing the bill for another son to finish college out of state. He is not greatful either. I have health issues and am still fairly young.

  • Stressed to the limit says:

    I am glad to have found this site. Growing up I had everything I could want. I too never grasped the concept of money and my parents never let how much they were struggling show. I am lucky to have a job where I am financially stable. I am by no means rich but I am able to save on a monthly basis. My husband grew up opposite of me. His parents seemed to have the ability to tell him no and he grew up with parents who taught him about money.

    Now my parents who were never well off and who have never saved for retirement are in a bind and in need of assistance with buying a house. My parents do not have good credit so can not go out and buy a house. I on the other hand have exceptional credit. With property the way it is now I hate to help my parents rent which in our area would cost anywhere from 550 to 700. I would much rather buy them a house where the morgage payment is 300. I just don’t know how far I should be going with this. My husband is on board to help but somtimes I don’t feel like he understands fully. If I do buy them a house I don’t understand how it will affect my taxes….. and I don’t really know where to start.

    • MoneyNing says:

      It’s great that you are trying to help your parents. If I were in the same situation as you, I’d be trying to buy them a house (pay for the mortgage + down payment) by myself, with the house in my name because anything else is too complicated to deal with down the road (especially if you have any siblings involved).

      In terms of taxes, I suspect that since you probably alreayd have a mortgage on your primary residence, you cannot deduct anything from another mortgage on another house. However, since you are in a way supporting your parents, you should be able to get more deductions for dependents. Of course, this is just my guess, as I’m not an accountant so it’s best to always to ask for professional opinion. Another way to figure out what the difference in taxes will be is to use the online tax software and just plug in the numbers of the different scenarios, since you don’t have to pay for using their service until you file.

  • marci says:

    Aside from willing giving “gifts”, I will occasionally loan my kids money for a special purpose, that we have discussed.
    But that’s what it is – a Loan – with documented paperwork and interest stated. Since I have more than one child, it only seemed “fair” that if something happened to me, the other children would not be shorted of their inheiritance…. Therefore, it is all down legally.

  • Marle says:

    My dad seems to be more than fine financially, but my fear is that I will one day find out that he’s not.

    My mom has never been financially fine. She spent all her money and went into serious debt to give me a middle-class lifestyle growing up, and she’ll never recover from all the years she lived beyond her means for me to live in a house in a good school district. So I help her out now that I’m able to. She lived with me for a little while, and then I co-signed for her to live in a nice little apartment (we both prefer she have that independence). Some months she calls me up for help with the rent, because her social security and part time job don’t always cover everything, but that’s ok with me.

  • When my mom was in a financial bind, I definitely provided her with financial support, especially because she always went over and beyond for me growing up. Now that I’m in a bind, she let me know that she’ll never forget that and will help me out as well.

  • We both have similar cultural backgrounds and I think it’s expected that children provide for their parents in their elder years. It’s really the non-governmental version of Social Security, when you think about it. They aren’t investing in a 401(k), they’re investing in YOU. đŸ™‚

  • PersonalFN says:

    I think it will depends upon earning and savings of parents,if they are dependent on us than obviously we have to offer them helps, in case they had adequate money and don’t require any kind of assistance financially, then we can continue, in same way.

  • Stan Sloan says:

    What a timely article. I and my brothers had just talked about this last week and we came up with a very good decision that will not only help our parents but also ourselves. We came up with a fixed amount for each one of us that we will deposit on our parents account on a quarterly basis and half of that amount will be for our parent’s daily needs and the other half for emergencies. An emergency fund not only for our parent’s use but for any of us.

  • Little J says:

    Both of my parents are near retirement age or retired, and at the moment are on solid financial ground. Inflation is not so large as to make the pension worth less material goods as their paycheck (from working) would be. But that day will come, so I am preparing by buying savings bonds they can cash. I thought about an annuity, but in my family the gift of a savings bond or stock is acceptable, where an annuity is not.

    My father bought me my first car. It was completely paid off before I got my first job. I offered to pay him back over a series of car payments each month, but he declined. Instead, I have been making such a car payment into a savings account that is earmarked for future medical and care expenses for him.

    I do not have children at the moment, so am able to do this with my funds.

    I know that my parents are more likely to need the financial assistance in their 70s than in their 60s, so I am setting funds aside and waiting.

  • Very good comment by ininite banking. Treat parents how you will want to be treated by your own kids. Making it personal with that angle is a good way to get clarity on the issue.

  • MoneyNing says:

    Thanks for the suggestions and comments everyone. I really appreciate it (as do my parents I’m sure) so keep them coming.

  • I for one feel like my parents gave me everything and as long as i’m able i want to help them as much as i can. We owe it those that raised is. Remember that if you have your kids they may treat you like you treat your parents.

  • My parents live in Thailand and they have public health care so that’s one less thing to worry about. Their finance is not great. My dad is still working and probably will never stop, he’ll be bored if he’s not working. They have a rental condo and that helps pay the bill. I helped purchase another condo last year and they are renting that out also. So for now, things are ok.
    If your parents are fine on their own, then you don’t need to help them out. Make sure they are really fine on their own though. Parents sometime hide finance problems from kids. IMO.

  • KM says:

    If they are financially solid, then how about something that won’t inflate their lifestyle, but also give them enjoyment? For example, you could invite them on a family trip and pay for their flight, car rental, hotel, etc. or the gas and hotels if it’s a road trip. I am sure your daughter would like a trip with her grandparents and they would too. If they try to pay you back, you can say “It’s on me. It’s the least I can do for all you have provided for me.” And continue to save the rest of your money until a day when perhaps they really do need your help, like medical bills or something. And maybe they will live longer than they planned their retirement for, so their funds could dwindle even if they are ok now. But I am huge believer in “prepare for the problem, but don’t panic until there is one.”

  • Jerry says:

    Do your parents have life insurance? That might alleviate some worry on their part. But, if it came up, and health or others issues lead to the need for me to help my parents it would not be an issue for me. The least I can do, as a matter of fact.

  • paycheck stub says:

    mindset of parents and children is completely different and so are financial matters. Both need to understand each others point and help out in financial matters

  • Jenna says:

    I think it depends on the family, if you have older parents who have health issues, it makes sense to help them out (if you can afford to do so), but if their healthy parents I think offering to take them out to dinner to show appreciation is nice.

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