Some children have a natural ability to save and be careful with their money, whereas others will be spenders…even if you have given them a good level of “financial education”.

The sketch above by Carl Richards from Behavior Gap sums up exactly what can happen when your kids are first out on their own and trying to manage their money.

There are different views on what the “right” thing to do is when you discover you child is in debt.  Especially when they’re at the age when they’re not earning a full-time wage.

Do you help or let them learn the lesson the hard way?

There’s a lot to consider when making this decision, such as:

  • Will the money used to pay off the debt be a loan or a gift?
  • Can you afford to help your child financially?
  • How will this affect your relationship with your child?

You may also find that you and your spouse/partner or other family members have different views and therefore will this cause problems within the family? And the challenge is if you do it for one child, do you do it for all?

Part of being a financial adviser is helping people with their cashflow and debt management and, in this case, talking through the options available so that the parent’s financial future isn’t compromised by helping their child.

If this situation sounds familiar, to you or a friend, or call us on 8391 9310 so we can talk through our approach and support you through the process.