Stan's World - Helping Others (Responsibly)

I engage in pro-bono work for a few non-profits, helping people with financial difficulties. In a society where the gap between the haves and have-nots is growing ever wider, I view my involvement as an obligation. 

It might be a single parent who is having trouble juggling his/her bills on one salary, or a homeowner who is struggling to pay the mortgage. Sometimes it’s a young family trying to make ends meet while trying to raise children. A recent case involved two seniors who got into financial trouble while trying to help their grandchildren. I got called in because their ability to continue to make rent payments looked less and less sustainable. 

I suspect you’ve heard or read similar stories countless times; people on a fixed income who overextend to help a family member in distress. The details in this instance really aren’t pertinent but suffice it to say this couple never envisioned they would have to file for bankruptcy in their 80’s. Sadly, they’re in the process of doing so. 

The bigger point to be made is to what extent should we offer to help family members who are struggling with finances? The story of these seniors could be applied to any of us. Would you turn down an adult child, or grandchild, if they needed help? And if you did turn them down, how might that impact you emotionally? Or how might it affect your relationship with your family?

I recall a conversation from many years ago when I told a client that his plan to withdraw funds from savings to pay for college tuition for his children would jeopardize his retirement. He told me it was his obligation to pay the tuition, and he would work for as long as he had to until he could safely retire. In turn, I told him when we choose to retire isn’t always our decision, and that you can borrow money for tuition, but you can’t borrow money for retirement. I lost that argument, but in this business, losing an argument means we shift our obligation to try to make Plan B work, optimal or otherwise.   

When it comes to family, there are ways to provide help without jeopardizing your own finances. Setting limits is a good place to start, though admittedly it may be difficult to do so due to unknown variables (e.g., how long? how much?). Setting limits means yes, an adult child may be able to return home to live, but for this many months and with a monthly payment to cover their rent and food costs. Setting limits means yes, you can help with a cash shortfall, but at a fixed amount for a set number of months. You can be generous, but not at a cost that will jeopardize your future. 

Obviously, there are exceptions to all rules. If you have excess savings (e.g., more money than you need to support yourself in retirement), then parameters can obviously be expanded. But at what cost? Your generosity shouldn’t lead an adult child, or an adult grandchild, to become dependent on your largesse. That sort of ‘conditioning’ can lead to a host of other personal familial complications.

If you find yourself in one of these predicaments, may I recommend you take advantage of having a personal financial planner. We’re an objective third party that can look at a set of circumstances and help you to determine how much financial assistance is required, and for how long. While we don’t have the counseling background to dive deeper into interpersonal relationships, we can help you to draw a line under what you can do, while also helping your loved one get back on his/her feet. 

There’s a dissatisfying expression that’s sometimes used when a good deed goes awry: “No good deed goes unpunished.” Maybe you’ve heard it, or perhaps even used it (I know I have), when you attempted to help someone, only to see things turn sour. Unfortunately, there are times when doing good doesn’t generate positive results, either personally or on behalf of the intended recipient. 

Life works in mysterious ways, and much to my chagrin, we’re not always able to control each step. One of the reasons we’re here is to help you to decipher some of those mysteries. Filing for bankruptcy in your 80’s is a hell of a time to utter the words: “No good deed goes unpunished.” 

S.F. Ehrlich Associates, Inc. (“SFE”) is a registered investment advisory firm in New Jersey that offers investment advisory, financial planning, and consulting services to its clients, who generally include individuals, high net worth individuals, and their affiliated trusts and estates. Additional disclosures, including a description of our services, fees, and other helpful information, can be found in our Form ADV Part 2, which is available upon request or on the SEC's website at www.adviserinfo.sec.gov/firm/summary/121356.

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