As children get older, sometimes their problems get bigger. The meaning of no is now transferred from a delayed bedtime to $20 for a movie. So how do you know how much financial help to give to a growing child? There are several factors at work here, and several scenarios to consider. First of all, we’re not talking about the typical teenager here. Jobs for teenagers are few and far between in this economy, but that still doesn’t mean that you can’t foster good work ethic and saving requirements on your teen! An allowance is a great way to teach them that hard work turns into cash. A mandatory savings requirement of 10% of their earnings is a great way to implement a savings plan. Be honest with your child and speak to them in real terms with money (this can happen as young as 5). If they earn a weekly allowance of $10, and their desired purchase is $20, teach them that in order to make this purchase you’ll have to wait “two allowance periods.” Above all….you can teach your teen the beauty (and often difficulty) in delayed gratification.

What we’re talking about here is grown children who, feasibly, should be out of the house, on their own, holding down a job and making a life for themselves. Here are some things to consider before cosigning a dirtbike loan the 30 year old who is still living in your basement ….

1)      How much retirement savings do you have? Everyone pities a poor grandma/grandpa. Living on a fixed income is rough! The money you’re saving away for yourself today equals LESS of a burden on your adult children in the future. Saving for yourself could end up saving your kids a bundle, too!

2)      What is your child’s history with credit? Do they work three jobs until they’ve paid you off, or do they easily let things slide never even paying you back the $20 they borrowed last Thanksgiving?

3)      Are you helping your child stretch their wings for the first time, or is this another bailout? A lot of parents take this as a direct criticism to themselves…it’s not. Children grow up to be their own individuals. If your child consistently falters with debt repayment, it doesn’t mean that you’ve failed them as a parent. You can still teach them a lesson even now….and it’s called tough love.

Attorney Dana Wilkinson is a bankruptcy attorney from South Carolina and she tells this story:

I once represented a woman whose house was in foreclosure.  A Chapter 13 case can usually help with that, but this woman was in her 80s, and I was concerned about the feasibility of a five-year payment plan for someone in her situation.   It turned out that she was supporting several grown children who lived with her, and was trying to save the home so they would have a place to live.  But the mortgage on the house was far in excess of the property value.  So I asked her what did she think would happen to the house when she was no longer around to make the payments.  From her reaction, it was apparent that the question had never occurred to her before.

Sometimes the best, most loving thing we can do for our children is to say “no.” While parents have the instinctual need to protect and/or fix problems for our kids, sometimes the greatest gift we can give our children is to teach them to fix it themselves. Offering a hand up is much different than offering a handout.