Am I Ruining My Kid?

Lending Money to Your Adult Kid

Should you? No. But that won't stop you. So be armed with these tips

Photograph by Getty Images

That's right—it's probably not a great idea to lend your older kids money. But life is more complicated than that, right?

Consider these federal government stats: Unemployment rates have jumped 4 percent in the last six years, and most of the people out of work in this country are concentrated in their late teens (23 percent) and early 20s (13 percent). Of the nearly 50 million uninsured people in the United States those most likely to be without health care coverage are age 18 to 34, or earn less than $25,000 a year. This health care crunch, along with the rising cost of higher education and unemployment rates, can quickly lead to financial struggles, especially for young adults new to the job market or saddled with student loans.

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So, how can parents be smart about giving their financially flailing children help?

Research the situation. Ask critical questions of your children, advises Jean Chatzky, author of the recently released Money Rules. Why the money is needed? Does the child have an income? Does she have credit issues? (And how are they being resolved?) Is there a mortgage?

“It’s OK to say, ‘This can be messy. I am not saying no, but let’s look at all the options first. Is there a way you can borrow from a traditional lender?’” Chatzky notes.

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