Helping our grown children financially – lifesaver or crutch?

The concept of chessed or loving kindness is very prevalent in Jewish communities in Israel and around the world. Helping our children to succeed can be considered the highest level of chessed because, as the saying goes, charity begins at home.

In Israel, there is a growing phenomenon that parents are continuing to support their children long beyond their teens and even twenties, and well into their thirties and beyond. Is this a positive trend and what are its long-term ramifications?

Over the years I’ve seen many, many clients who receive ongoing parental support – some monthly and others occasional – but almost always on a consistent basis. Some parents sacrifice part of their monthly expenditure (ie funds that they would have directed towards savings accounts, vacations or consumer goods) to help their children and grandchildren make ends meet each month. With many Israelis starting their careers at later stages after army, university education, kollel or other vocational training, parents feel the need to continue supporting their children when they are well into their thirties and beyond. Between 30-40% of thirty to forty year olds receive ongoing help from their parents, and in some communities this number is significantly higher. Approximately half of the population owns an apartment by the time they reach their thirties but only 30% of them afforded it by themselves. What’s behind this growing trend?

• The prices of basic goods and services keep going up in Israel. While official inflation is running at approximately 2-3%, inflation might be much higher for us due to our specific spending habits, and well beyond the rise in our wages.
• Housing prices have risen sharply over the last three to four years pushing even small apartments for new couples into almost unaffordable territory for the average couple.
• Today’s job market is much less secure than our parent’s job market was. We all know people from previous generations who worked for a single employer for their entire working life. This is almost unheard of today.
• For decades the standard of living in Israel has gone up, and continues to rise consistently. The remarkable growth of the Israeli economy has spearheaded this increased standard, but it has also significantly increased our expectations. Our kids increasingly come to expect the higher standard of living that they grew up with, even when they go out on their own.
• Many young families do not take financial responsibility for their actions, and rely on their parents to bail them out. It might be ok for small children to put away their allowance and rely on their parents to buy them whatever they want, but shouldn’t that attitude change?
• Most people lack basic financial education to help them make smart financial decisions on a day-to-day basis. Without proper financial systems, controls and safeguards, the risk of debt accumulation increases substantially.

Those parents who can afford to help their children in any and every way, merely have to decide to what degree they want to enable their children’s independence. But it is a very different story for those who are less affluent. Helping one’s children when one is not sufficiently financially stable to guarantee a secure financial future is not without risks. When retiring (often in one’s sixties), our earning potential goes down while we are coping with caring for both elderly parents and our kids (as we become the ‘sandwich generation’). Sacrificing for our kids must be weighed against the long-term implications. Here are some guidelines and points to ponder when giving to your children.

1. Give to your kids to provide them with opportunities, not necessarily ongoing support. They need to take responsibility for their financial future, but if you are willing to finance extras that open doors and opportunities (like paying for chugim or higher education), you will be adopting a very constructive way of giving and helping.
2. Large one-time expenses like simchas – wedding, births, bar/bat mitzvahs are a great way to support your children without developing too great a dependency.
3. Support your children’s financial education by sending them to courses or professionals for assistance and training. Providing the means to help themselves is generally considered the biggest chessed one person can do for another. By facilitating independence and financial competence, you are offering more than just a handout.
4. Ensure the recipients don’t define themselves as needing help nor develop a long-term reliance on your assistance. Dependency with no plan for breaking the cycle is a recipe for disaster.

Sometimes parents need to give, and giving not only helps the child but also gives the parent an opportunity to feel connected. But think closely about how you give and in what manner. Targeted giving can provide not only current financial assistance but also with G-d’s help, the key to long-term financial success.