The bank of Mom&Dad

When parents are the last resort for emergencies

Even before the pandemic, millennials had lower median incomes, far more debt and a much smaller slice of the nation’s wealth than boomers had at the same age. Millennials — usually defined as those ages 24 to 39 — are more likely than older generations to have lost jobs or household income because of the pandemic, various surveys show.

Before parents ride to the rescue, financial planners urge them to map out a strategy that doesn’t just plug a short-term need but also makes sense in the long run.

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Encourage your kids to take full advantage of available financial help before extending yours. They may not know, for example, that unemployment benefits have been dramatically expanded because of the pandemic. Weekly payments are higher and are available to people who normally wouldn’t qualify, including gig workers, the self-employed and people whose hours have been reduced.

Assess your situation While your kids are filing for 2 unemployment and calling their lenders, take a moment to assess your own finances.

Some parents make a conscious decision to operate with a smaller cushion, or to delay their retirements, to help their children, says CFP Lazetta Rainey Braxton in New York. Just keep in mind that you may not get to decide when you retire. Many workers retire earlier than expected, often because of a health problem or job loss. Helping your children now could mean you have to lean on them later, Braxton says.

Set boundaries Financial

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planners typically recommend deciding how much to give, and then setting clear boundaries about when the financial help will end. That’s tricky now, of course, because no one knows how long the current economic crisis will last.

But parents can still set expectations in other ways, financial planners say. If the child didn’t have an emergency fund, for example, parents can discuss the importance of saving money out of every future paycheck, so the child won’t have to rely on family help again, Braxton says.

“Some parents will just put on a Band-Aid and give them money, but they really haven’t helped in terms of their financial capacity,” Braxton says.

If an adult child is moving back home, certified financial planner Jeffrey L. Corliss suggests a written contract outlining chores and responsibilities, such as how soon they’ll be expected to move out after finding a job. A similar end date can be set for any cash the parents hand out.