5 Questions to Ask Yourself Before Supporting Parents Financially

You mean well and  the next time you’re with your parent(s) you hear the words come out of your mouth, ‘‘How much money do you have and what are your plans?”

-Awkward -

Though it is noble to honour your parents by supporting them, as best as is possible; you should be ready for the likely push-back and the awkward questions that may arise, for you and your parent(s).  

Resist the urge to flee. Read on (we’ll make it worth it, promise)

Let’s Get Real. It’s Time For Clarity

To know how to support your parents, you’ll have to look into what is, (which means), even if the idea of talking to your parent(s) about their money is almost equivalent to shoving an elderly person; these “tough conversations” do matter and they are a good place to start before planning and for valuable results.

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Remember, that other than age-related complications, factors such as bad money habits, forced retirement, job loss – are some common reasons. 

These may have your parent(s) in a tight spot - but should you stretch, save then step-up’ or borrow? Is this a monthly, weekly basis affair? How much is enough / too little? Do my siblings chip-in? (etc.)  

• To help resolve these and more possible questions, here are a five questions you should ask yourself before committing to financially supporting your parents, in any financial capacity
  

1. Why Do Your Parent(s) Require Your Financial Support?

Assumptions are a no-no! Get your facts straight before you volunteer and/or agree – to avoid family conflicts. 

It’s a relief when a parent(s) can ask for help but like other “request-for-help scenarios”, start with and frequently talk to your parent(s) and understand why they require financial aid. 

This helps to identify your parent(s) awareness about their financial situation

“Before You Assume Anything, Ask. Before You Conclude, Verify”

This means, getting to know what your parent(s) past, current and future financial obligations and overall situation looks like. 

For example, you’ll get insight into their their savings, their accounts and membership to other financial services details, their assigned power-of-attorney / legal custodian (if any) 

• By understanding what is and what is needed; you get a clear understanding of whether you’re required to step-in immediately or at all; in some cases you may find out you can step-in at a partial capacity 
  

2. What Financial Support Do Your Parent(s) Require?

Once you determine that help is required, this question will help you to identify how to support your parent(s). That means, determining what type of financial service or product is required and how much is required 

• Remember, financial help comes in different forms: from opening a joint parent-child account to contributing a lump-sum amount or installment payments. 

For example, to clear debts, for living expenses, for medical expenses (etc.) different budget amounts and timelines are required

‍3. What Is Your Financial Status?

What’s next after you identify that your parent(s) require financial support, the type of support and how much support is needed?  Next, you need to determine if it’s achievable.

• If you’re a newlywed, have a newborn, getting your career jump started, in school and working (etc.), you probably won’t have enough money to support your parent(s) and yourself.

TIP: Instead of being dismissive or saying 'no’, take on a practical supportive role that you can comfortably take-on (e.g.) create or upgrade the household budget, monetize assets, register your parent(s) into healthcare insurance plans, interest-earning savings services like the money market fund, Saccos, retirement benefits account   

• If you’re able to comfortably support your parent(s) and yourself, there are a few ways to protect and grow your financial situation too. Remember, even though you can - be respectful and clearly communicate to your parent(s) about your choice to help, how you’ll contribute and your parent(s) role (where applicable).
  

4. Who Else Is Involved In Supporting Your Parent(s) Financially?

‍This may seem like a no-brainer, so if a parent(s) asks you for help over your siblings (for peace-sake, go back to question 1, if they’re not keen on involving your siblings)

• It’s always better to have your siblings involved - firstly because like life, financial circumstances are volatile. Secondly, in the event of your demise, loss of income or incapacitation, your parents will continue to have the financial support they need 
  

Remind your siblings or others involved, to assess how this will affect their personal finances too. This way, you’ll also get to understand how those involved can fairly contribute. 

TIP: A family meeting is a neutral setup to consider. This allows you, your siblings and parent(s) to discuss and setup a “safe, reliable and legal” guide for equitable financial responsibility. Get notarised written agreements, to protect everyone’s interests and for quick dispute resolutions

5. When Should You Start Supporting Your Parent(s) Financially?

After determining the what, why, who and how of financially supporting your parent(s); the next piece-of-the puzzle is to set a timeline/time limits 

Depending on your adjusted budget, you’re able to determine when a new or updated budget takes effect (your contribution may start immediately / in days, the next month, in a few months etc.). 

Where others are involved – make sure the final written agreement indicates the exact dates each party is to contribute and for how long. 

• For example recurring costs, one-time costs like some treatment costs and for short-term goals like house renovation costs (etc.), will have different timelines from regular costs like loan repayment, monthly savings, mortgage payment, day-to-day expenses 
  

Start Right. Don’t Leave It To Chance

The theme of money and family makes for great TV but this catch-22 scenario is not one you want to feature in, but if you’re financially supporting your parents it does not have to be a tear-jerking, regretful experience. 

• Simply get the ball rolling with the 5 questions above
  

Whether your parent(s) are years away from retirement and/or whatever their financial situation is - it’s a good idea to have a plan on how to financially help out, in the event of financial emergencies  

Remember:-

1. You and your parent(s) quality of life should not decline 

Make a financial plan that factors in what’s required and your capacity to help. This may include consulting financial experts / a financial planner where need-be; as pro’ help for your parent(s), you and those involved to correctly adjust your finances

2. Non-monetary help is practical financial support, especially where your parent(s) require more help in adjusting their financial choices (e.g.) help out with the relocation search to downsize to a new home or to move into your home, help create budget(s), if it's your profession or you’re skilled in specific type of repairs or DIY skills use these skills to help with their car and /or home repairs
3. Think twice before taking on and signing anything and you can avoid the pitfalls of helping your parent(s) financially. This way you can be there for them when they need it.

You’re not just doing this for you; you’re doing it for them too. It helps to have a practical financial plan that encourages teamwork between you and/or siblings and your parent(s)