BOSTON (CBS) – If the adult kid brings up the subject of money in conversation it’s often because they don’t have any. They want to borrow money from you or have you co-sign a loan for them. I strongly recommend that you do not co-sign a loan unless you have the cash available to pay for whatever they are purchasing. If they default on the loan you will be liable to pay it back and it will affect your credit report and credit score.

According to a recent survey found that 40% of respondents who had co-signed a loan or credit card lost money and 26% ended with a damaged relationship.

Loaning your kid money because they have lost their job or for some catastrophic incident like an earthquake that’s not covered by insurance is a noble thing to do. Loaning your kid money because they have used their credit cards indiscriminately to live beyond their means is not a good habit to get into.

And it can easily become a habit for they know which buttons to push and just what it takes for you to cave in and bring out the checkbook. Remember when they would pull a tantrum in the store and have a meltdown and you would give in. They do too!

If they show up at your door needing another loan its time you suggest that you pay for them to meet with a credit counselor or a financial planner to help them acquire budgeting skills. None of us want to postpone gratification, but it’s something we learn we need to do as grownups. It’s part of the passage to adulthood. The best way to help our kids is allowing them to solve their money problems on their own!

If you really feel you need to loan them the money formalize the deal. Use a contract and charge them interest. And hopefully with a formal plan in place you will be repaid.

One more thing: Should you lend money to family and friends? If you are doing very well your family may expect that you help the less fortunate members, even if the less fortunate are less fortunate because they are financially inept!


You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

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