For many years, it has been a relatively common practice for parents who could afford it to help their children finance their first home. And it is especially so now that real-estate prices are skyrocketing, making it difficult for many young people to purchase a home on their own.
In the past, this financial assistance was given to young, newly married children. Now that singlehood has become a widespread, accepted way of life, parents are often asked to help their unmarried or divorced sons and daughters.
Is this a good trend? If adulthood signifies freedom from dependence on parents, doesn't this monetary arrangement prevent the son or daughter from developing a mature independence? Doesn't it tempt the parents to use their position as benefactors to maintain a possessive role? There are these dangers, but they can be avoided if both parents and children take steps to guard against them.
In deciding whether to make a financial arrangement, all involved must examine what their relationship has been like and how money has influenced it. Have the parents tended to control the child's life? Are they still having a hard time letting go? Have they used money to hold on and to control? Has the child taken money from the parents to avoid becoming independent? Has he used money irresponsibly, such as blowing it on drugs? Is that still true?
If money has been used negatively, it can lead to what I refer to as a "song and dance," a term I coined in my book "Cutting Loose" (Simon & Schuster, 1977). There are specific patterns of behavior that develop between parents and children when the child is very young. These patterns are repeated throughout life, always causing bad feelings in all concerned. The song and dance about money I call the "Money Minuet." One common "Money Minuet" is caused when the parents' gift is accompanied by grumbling, worry and attempts to provoke guilt. The child's role in that "Money Minuet" might be to feel guilty or to believe that they have to pay back the parents through endless favors. Or the child might respond angrily, accusing the parents of trying to make him or her feel guilty, declaring that he or she is sorry that they ever took a cent from them. This can hurt the parents, make them feel unappreciated, etc.
Because songs and dances always lead to bad feelings, it is important to be aware of how a current financial agreement could lead to an old and unpleasant "Money Minuet," and to take care to avoid it.
One thing you can do to avoid trouble is to draw up a contract that spells out all the terms of the financial arrangement. Is it a gift? A loan? A combination of both? If it's a loan, is there interest? How much? When are the payments due?
Can Prevent Misunderstanding
Sometimes parents and children are uncomfortable about making such a formal arrangement, but a contract can prevent misunderstanding. It also makes everyone think about the arrangement realistically.
The parents must ask themselves: Can I really afford to do this? I'd like to make it a gift, but I need this money back, particularly now that I'm getting older. Do my child's plans for repayment make sense? The children must ask themselves: Can I afford the payments? Is the payment schedule realistic?
Sometimes, being forced to deal with the reality of the situation can cause a change of mind: "Writing down the figures made me see that if I spend that much on payments for this apartment, I won't have much left to enjoy life. I'm going to look for something less expensive or wait until I'm making more." Sometimes thinking it through leads to a change in the agreement: "I'm expecting a substantial raise about eight months after I take the apartment. May I delay making payments until then?" The parents readily agreed and the schedule of payments was rewritten.
But the crucial factor in avoiding the "Money Minuet" is that there be no hidden strings. Each person may have unstated or secret expectations that later cause trouble. For example, the parent may be expecting to be able to visit every Sunday and the child, unaware of this, is rarely available for such visits. After a while the parents may explode, "You wouldn't own this house if it wasn't for us, but you never have us over." Or the child may expect that even though it's a loan, he won't have to repay his parents. When the parents mention that a payment is due, the child may feel and even say, "I never thought my own parents would take money from me." So it is important to discover if there are any unexpressed expectations before the agreement is finalized.
Receiving money from parents to buy a place to live does not have to keep a child dependent. In fact, if the arrangement is clear, open and is not used by either party in manipulative ways, it can be a wonderful and loving parental boost to the child's independence.