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Should you help your child out of financial strife?

When your child is in need, your natural instinct is to assist them.

But when the issue is financial, you may be wondering how you can help them and whether or not you should be providing any at all.


There is no right or wrong answer as to the best course of action to take as it is all dependent on your and your child’s circumstances.

You should not rush into any decisions but take time to weigh up your options and potentially discuss it with your partner or trusted family member.

Here are four questions you should ask yourself.

1. Can I afford to pay off the debt?

Depending on how much debt your child is in, paying it off could affect your financial security. You need to look over your finances and see if you have the capacity to comfortably pay off any debts, yet still be able to maintain your current lifestyle. Will handing over your savings cause you to postpone retirement, or struggle with day to day living expenses? It is important that you do not allow your child’s debt result in any problems for you, now or down the track.

2. Will my child learn from the experience?

Giving your child a once-off handout may not seem to be a bad idea, but the problem is when it becomes a pattern. Habitually paying off your child’s debts can create a cycle of dependence. Your child needs to learn from the experience and acknowledge the issue that resulted in debt, whether that be poor budgeting, overspending or lack of understanding. This may mean you have to be cruel to be kind and let your child take the fall for their financial strife.

3. What is my child’s financial situation?

Whether or not you decide to bail your child out of debt should depend on your child’s financial history. Are they typically a good saver and the debt they’ve accrued is just an anomaly? Sometimes, there may be more to your child’s financial situation than just one outstanding credit card bill. If you suspect there is underlying issue, take time to speak to your child in a non-judgemental way and encourage them to bring it up, so together you can discuss it.

4. Are there alternative options?

Before handing over money to your child, think about what alternative options are available to you. In some cases, all they may need is a helping hand in using their money better. Spend time with your child to create a practical solution for them to pay off debts. Draw up a detailed monthly budget with incomings and outgoings and work out ways they can reduce their spending and address debts. You may decide that your child needs support from a professional such as a financial adviser. At Mortgage Choice, we have a team of expert advisers who can work with you and your child to sort out your debts and establish sensible money management strategies for your long term financial security.

If you would like to know how we can help you with your or your child’s finances, speak to your local Mortgage Choice expert today.

Posted in: Financial planning

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