How much should you know about your 20-something’s finances?

Every mother can remember very vivid moments in her children’s lives. The first step, the day they won an award, and those times when you were sure you had taught them how to tie their shoes. But even when they reach 20-years-old, you'll cringe when he or she walks out the door with their $120 shoes untied.

Those are much the same feelings as a parent has when they hear the words, “Mom, I just need $60 until payday or “I just didn’t think things would work out this way, but I need $500—soon.” Every parent reflects back to the time you were just positive you showed your child how to balance a checkbook or your explained how to plan ahead for the unexpected things in life. But when does financially helping your “adult children” cause more problems than their current issue? How much should you know about your 20 something’s finances beyond “we're good” and you see the lights and heat are still on and there is some food in the refrigerator? The answer is: more than you think.

About $40 billion in parent-to-child loans are made every year. Whether or not those debts are repaid might depend more on the lenders than the lendee. A national financial literacy organization, Jump$tart, conducts a biannual survey of high school seniors. Over 55% of students from all over the U.S. report they learn their money management habits form their parents. If this is not comforting information, rest assured that it is never too late to become a financial role model. Here are a couple of things to consider if/when your adult child asks to borrow money:

1. Think back on their financial history. Have they borrowed money before and have they paid you back?
2. If you take it out of your savings and something happens to your financial situation, will you be okay?
3. Do not be shy about asking to see their checking account statements and credit card bills. Was this really something that just happens or is there some thing they could do to help the situation?
4. Don't agree to cosign or your put your credit history at risk. If you must, take a loan out on your own and then attempt repayment from your son or daughter.
5. If you do “lend” child cash and they agree to a repayment plan, don’t criticize them about how they are spending their money. There will be plenty of time if they don’t make the payments!
6. If you give them money, let other siblings know. Fair is fair and keeping family secrets will not make for a Norman Rockwell Thanksgiving.
7. Keep your promise. If you swear you will only lend money once, and then be ready to turn them down should the second time arise.
8. Give serious consideration when you invest in a business with your children. Ask the exact same questions you would if you were investing with a total stranger.
9. Be prepared to say NO if need be and be prepared to tell your child why you can’t help.

Most parents gloss over money matters with their children. Most don’t always serve as role models but if you have reached at the point in life, your child trusts you to ask, you have no doubt done some thing the right way. And start now with teaching and sharing good money management skills with other family members. It is a gift that can last a lifetime and give everyone a degree of security.

We are so exicted to one of the sponsors for the upcoming Mom 2.0 Summit in Houston. In honor of the event, this week's Blogging For Change posts will be by moms and for moms (& dads too)!


Cathy Williams is a former writer for MMI.