Liz Weston: When your kid is a financial train wreck

Financial planners and credit counselors see plenty of examples. The grown son who lost a job, moved home and stopped looking for work. The daughter who constantly mismanaged her checking account — and turned to payday lenders when parents stopped covering her overdrafts. The father working into his 70s to support spendthrift children in their 40s and 50s.

Kristi Sullivan, a certified financial planner in Denver, once worked with an elderly couple whose offspring constantly turned to them for help.

"The clients couldn't understand why their grandchildren had all the latest iPads and phones, but when a car or home repair came up, their adult children always had to ask them for money," Sullivan said.

Giving adult children money is the norm in the U.S. Six out of 10 parents with adult children said they had given those children financial help in the previous 12 months, according to a 2014 Pew Research Center survey .

Parents usually give because it feels good. Eight out of 10 parents who help adult children — with money, child care, housework or home repairs — said doing so was rewarding, Pew found.

But the toll can be steep, advisers say. Supporting able-bodied children or repeatedly bailing them out of debt creates dependency when parents should help them become self-sufficient. The unwise spending also can:

— Delay or derail the parents' retirement.

— Fuel sibling resentment and family discord.

— Enable dangerous behavior, including addiction or untreated mental illness.

The "just say no" advice doesn't get far with parents stuck in these patterns, advisers say. Many parents don't understand the harm they're doing, and the children certainly have no incentive to change, said Bruce McClary, a former credit counselor and spokesman for the National Foundation for Credit Counseling in Washington, D.C.

Change is possible, though, when parents set limits and communicate those limits to their kids. Here's what planners advise:

FIGURE OUT WHAT YOU CAN AFFORD

Delia Fernandez , a CFP in Los Alamitos, California, uses retirement planning software to show what happens if clients continue spending on their kids at their current level. Often, the results are eye-opening. "They'll say, 'Why is the chart turning red?'" Fernandez says. "They thought they'd be retiring at 62, but now they're looking at 66 or later." If parents can't agree on a figure, a third party such as a planner, accountant or even a therapist may be able to help.

SET EXPECTATIONS

Many parents who support adult kids have never talked about money with those children, planners say. Parents should be clear about when they will and won't help. If the children aren't trying to be self-sufficient, any help should have an expiration date. If the offspring needs basic budgeting help, credit counselors can offer advice, classes or debt-management plans.

PLAN FOR 'EMERGENCIES'

The financially irresponsible limp from crisis to crisis, so parents who set boundaries should expect to get pleas for emergency help. If possible, avoid knee-jerk responses, planners say. Parents who decide to step in should set and communicate limits, Fernandez says. For example, they can offer to pay one or two months' rent to stave off an eviction, but tell the offspring to find affordable shelter after that.

TARGET YOUR HELP

Very wealthy parents may hand over annual checks as a way to reduce their estates and avoid future estate taxes. But giving cash to irresponsible adult children is a bad idea. Instead, parents should direct the money toward something specific, such as paying the mechanic for a car repair or taking over certain bills, planners say.

CONSIDER YOUR OTHER KIDS

Money shouldn't equal love, but it often does in the siblings' minds when financial help is doled out unequally, says Laura Scharr-Bykowsky, a CFP in Columbia, South Carolina.

Siblings also may worry they'll have to support the parents or the financially irresponsible child someday, which adds to their resentment. Knowing the parents have a plan to wean that person, or some kind of "stop loss" figure where they'll stop giving, can ease the situation.

Parents may not be able to treat their children equally in life, but Scharr-Bykowsky encourages her clients to at least do so in death by dividing their estate equally — assuming, of course, that there's anything left.

Treating children unequally "is a very hurtful thing," Scharr-Bykowski says. "And the parents don't see it."

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This column was provided to The Associated Press by the personal finance website NerdWallet.

Liz Weston is a certified financial planner and columnist at NerdWallet. Email: lweston@nerdwallet.com Twitter: @lizweston