For a kid, his or her parents are the ultimate savior. No matter how grown up he/she is, a child always looks up to his or her parents when he or she faces trouble. The situation is also the same with parents. They can’t see their children suffer. They always want to help them out whenever they are in trouble.

Now the question is, should parents help their kids in every walk of their lives? Should they also pay their adult kids’ debt? Is it the right decision for the parents to help their adult kids financially? Well, it’s tough to decide! Parents should think twice before coming to any conclusion.

Parents are always ready to help their kids with money even if they’ve grown up or have children of their own. It’s a valuable investment to help out adult kids financially, say paying for their education or making the down payment on a house.

But, what should you do if your child makes a bad financial decision? Should you support that wrong decision of your child? Or, should you draw back your hands? According to the experts, you should think twice before you rescue your child. Not all your decisions are correct. One wrong step can make matters worse both for you and your child.

According to a report from BMO Harris Premier Services, analysts found that “parents would make substantial sacrifices to help their struggling adult children. Some 47% would be willing to retire later than planned, 25% would take on debt and 20% would make withdrawals from their retirement savings to provide financial support for their children, if required.”

Learn to say “NO”

What should you do if your kids are making bad choices? Or, what should be your decision if your adult kids ask you to help them financially? Should you support them? Well, parents are always on the go to help out their kids from any bad situation. That doesn’t mean all their decisions are correct. Parents often face immense trouble while helping their adult kids with money. Parents should analyze their financial footing first before they should say a “YES” to their kids. And, if they aren’t financially strong, then they should say a “NO” to their kids.

According to Kathleen Gurney, (chief executive of Financial Psychology Corp., a Sarasota, Fla., consulting firm) parents often put their finances in danger to help out their kids. Make sure you don’t repeat this mistake. Don’t commit something to your children that you cannot fulfill. Remember, you are not ATM machines for your kids.

Stay firm on your decision

Are your kids misusing the money you gave them to pay their dues? Are they using that money to make poor life decisions? If yes, then you should immediately stop supporting them. When you’re giving them money to support their bad habits, you’re actually enabling them to become less than they could be.

If you are too much concerned about your adult kids and want to help them economically, then make sure your terms are clear to them. Before you help them, you must find answers to these questions:

  • Why they need your help?
  • For what reasons they need the money?
  • Aren’t they financially strong enough to handle the situation on their own?
  • Will they return the money to you?
  • Are they using the money to fulfill some of their bad habits?
  • Are you giving that money as a gift or a loan?

Giving financial assistance to your adult kids is good. But, you shouldn’t hurt your finances, credit score, and retirement savings while helping them. If you can’t help them financially, then help them in some other ways, such as:

  • Analyze their monthly expenses and income.
  • Trim their monthly expenses.
  • Provide them credit knowledge.
  • Make a monthly spending plan.
  • Create a monthly savings plan.
  • Show them the steps to build their credit score.

No matter how many times your kids request you to help them financially, you should stay firm on your decision if you sense something wrong.

Make sure you are financially stable before you pay your adult kids’ debt. Also, don’t let your financial health suffer.

As per Stephen Williams, co-head of U.S. financial planning strategy at BMO Private Bank, “if parents and children have frank conversations with each other about the amount of support they expect to provide or receive, they can avoid misunderstandings that could put their financial situations in jeopardy.”

Don’t hurt your nest eggs

A report released by CIBC states that “66 per cent of parents are dipping into their nest eggs in order to support their adult children.”

You should never hand over all your savings to your kids for paying off their debt. By doing so, you might be making the biggest mistake of your life. You can’t guarantee that your kids will pick up all your responsibilities after your retirement. So, control your emotions and use a bit of common sense before handing over your nest eggs to your dear kids. They might not return the money!

Analyze the outcome

Before taking the plunge, you should wait and think about what could be the result of your action. See whether it’s a good solution or the beginning of a new problem. Make sure your son or daughter is using the money for something fruitful and would return you the money on time. If you’re sure of these two points, then go ahead and help your child pay off his or her debt.

Lastly, you should always judge your own financial condition first before helping others.

Don’t miss out: Stay away from debt in 2016: Do’s and Don'ts to consider

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