Personal finance is personal – each person/family has a unique set of circumstances. Many of the loudest voices in the personal finance space are those of privileged individuals who have not had the additional struggle of providing for family members. But the experience of providing for or assisting family members is not uncommon, and I think it’s important to see that experience represented, and to talk about how it affects one’s financial journey.
We recently received our annual property tax estimate for the home in which My Boomer Parent lives, which prompted us to sit down and calculate how much it currently costs us to keep a roof over My Boomer Parent’s head. Which, in turn, caused me to realize that My Boomer Parent is our greatest financial liability. (Although the mortgage on the house in which we live is currently our biggest monthly expense, the expenses for the additional house in which My Boomer Parent lives is our second-biggest monthly expense, and would be our greatest expense if homeowners insurance hadn’t soared here in Florida. Between insurance where we live and taxes where My Boomer Parent lives, the costs of both houses keep increasing, and compete for which one costs us more. But we also occasionally help My Boomer Parent with other expenses as well.)
Supporting My Boomer Parent started out slowly and increased over time, much like the proverbial frog being cooked in a pot of water. First, my step-parent lost their job and was forced into early retirement. Without my step-parent’s income, my parents could no longer afford the monthly rent on their apartment in a high cost-of-living area (HCOL).
So, we moved them to a much lower cost-of-living (COL) area and bought them a house to live in. We figured this way we wouldn’t have to worry about them not being able to afford housing. They agreed to reimburse us for the monthly mortgage payments. This arrangement worked well until my step-parent abruptly passed away.
My Boomer Parent has always refused to discuss their finances, but they’ve always been working class. There isn’t much money to stretch. I helped them apply for Social Security benefits after my step-parent passed away. There was also a very modest pension. But, over time, their mortgage reimbursements to us dwindled and then stopped. We could afford to absorb the expense because Spousal Unit was still working, because we were frugal with our spending, and because we had purchased the house in a low COL area before house prices had skyrocketed. We took over the house payments because we felt like keeping a roof over My Boomer Parent’s head was the right thing to do.
A few years after my step-parent died, My Boomer Parent wanted to move to live closer to family. The new location was a higher cost-of-living area than where they had been living, but lower than where they had lived when step-parent had to retire. We sold their house and bought them a new, more expensive house (but still before housing prices skyrocketed). Spousal Unit was still working. We discussed the fact that this house was more expensive, but My Boomer Parent did not offer to reimburse us for any of the expenses. (They do pay for their utilities.)
Property taxes are much higher in the new location. (Their old state was in the lowest quintile for property taxes. Their new state is in the highest quintile.) The new house is located within a Homeowners Association (HOA), which has an annual fee. (Previous house did not have an HOA.) We also pay for insurance on the house and maintenance and repairs to the house and property.
More years passed. Real estate prices skyrocketed. Property tax assessed values increased significantly. And Spousal Unit has been retired for over a decade. We have worked diligently to decrease our fixed expenses. But the expenses for My Boomer Parent’s house keep increasing.
Spousal Unit and I are financially secure, due to a lot of hard work, some privilege, and some luck. [I acknowledge the role that all three play, and credit Angela Rozmyn of Women’s Personal Finance with putting the idea into words.]
As we toiled to become financially secure, we also assisted and provided for our parents and several of our siblings and nieces and nephews along the way. There are a lot of emotions that go along with that, but I am grateful that Spousal Unit has never resented our decisions to provide for our family members, even after I stopped working and Spousal Unit was carrying more of the financial burden. (Although, after more than two decades of paying for an additional house for My Boomer Parent to live in, and as the costs continue to climb, Spousal Unit is getting a little frustrated.)
To be honest, we never expected, when we made the decision to help my parents, that we’d be paying all of the expenses for decades. We thought we were helping My Boomer Parent and Step-parent get back on their feet after a setback, and helping them transition from a situation that was no longer sustainable to one that would be. I guess we are a cautionary tale about unintended consequences. Despite everyone’s good intentions, helping a family member financially can put a big strain on your own finances. Also, be very careful about deciding to co-sign a loan or a lease for a family member (or anyone else), because you might be stuck making the payments and if you can’t, your credit rating will be damaged and the debtor can sue you. It’s normal to want to help your loved ones, just try to do it in ways that won’t destroy your own financial security. [We’re fine. Just trying to pass along some financial wisdom.]
Reaching financial security while assisting family members and providing housing to several family members along the way has been more difficult than doing it without those extra expenses/responsibilities. Not gonna lie, sometimes I envy people whose parents have assisted their journey through life. But I also appreciate what I have gained by standing on my own two feet and working hard to leave poverty behind and reach financial security. However, I acknowledge that not everyone has the same privileges I have had, especially health privilege when I was younger, to be able to reach financial security through hard work. I also acknowledge that the current economy is very different than it was when I was working toward financial security.
If you choose to help your family financially, one challenge is to help them without enabling them to become financially dependent on you or enabling them to continue to make bad financial decisions. And another challenge is to be able to help loved ones without undermining your own financial position, if for no other reason than that you cannot continue to help them if you have nothing left to give. While we have succeeded at the second, I’m afraid we may have failed at the first. Given My Boomer Parent’s age and financial situation, we will most likely be paying for their housing expenses for the rest of their life (unless/until they need assisted living care). And while I do not want to see them out on the street, it’s also hard to avoid occasionally thinking about all of the other things Spousal Unit and I could have done with all the money we have spent housing My Boomer Parent for decades. There is an opportunity cost to spending one’s money helping others financially.
These are just a few aspects of the choice to help one’s family financially. There are others I didn’t cover here, such as the potential strains it can put on a marriage/partnership. Furthermore, helping one’s family financially is not just a financial decision, but also can be an emotional, spiritual, and/or culturally-based decision as well. No matter how you frame it, helping family members financially multiplies the number of people in your financial plan, and makes reaching your financial goals more challenging. It’s time we acknowledge that, and include these voices/stories/case studies in the personal finance space.
Have you helped family financially? What lessons have you learned from the experience? What advice would you give? Please share in the comments below.