Singletary: Help children become financially responsible

WASHINGTON - As a parent, your job is to help your children develop the skills they need to become good citizens, and this includes being financially responsible.

During a recent online discussion, I answered questions from parents concerned about their adult children's financial lives.

Q: My daughter is having a baby in October and she and her boyfriend only have one car. Right now she is partly living at home and uses my car pretty much when she wants. She has poor money management skills, no college degree, and works part time as a waitress. She keeps getting declined for car loans, and has asked us to co-sign for her, which we really do not want to do. My husband's car has 200,000 miles on it and has been paid off for a couple of years. My car is two years old with 66,000 miles on it (75 percent put on by my daughter) with about $8,000 left on the loan. What sort of advice would you offer about the best way to get her a car, which she is really going to require with the baby? I wouldn't object to somehow selling her my car and getting a new one, but can't see how that would work very well either.

A: You need to let her grow up. She's not being financially responsible because she doesn't have to be. Let's look at the situation:

• She's got poor money management skills. How exactly will that improve with the pressures of a baby that she can't afford?
• She doesn't have a degree or, I'm assuming, hasn't tried to get any advanced skills that could increase her opportunity of becoming better employed full time.
• She can't get a loan on her own. It could be because she doesn't have a credit history but it could also signal that she's not responsible with debt.

My advice:

• Under no circumstances should you co-sign for a car loan for her. No. No. No. And did I say, No! Co-signing means you are equally responsible for the loan. Based on your daughter's history, that car loan will become your car loan. You will just feel more pressure and guilt to pay the loan for her. And how could you not? You will be thinking about helping with your grandchild.

• Under no circumstances should you sell her one of your cars. Think she will pay you back? Probably not. If you give her the car she's been overusing, you would have to pay off the $8,000 debt and then have the money to replace that car. If you can afford to give her a car, give it in the interest of helping with the baby but not at the risk of going into more debt yourself.

• You and your husband need, as soon as possible, to sit down with your daughter and the baby's daddy. What are their long-term plans financially? Ask about how they plan on caring for the baby with the increased financial demands. Will she and the baby be "partly" living in your home? I wouldn't stand for that. Go or stay but not this in and out. If she's staying, which might be best, at least temporarily, then you have a right to inquire about their finances, at the very least hers. You have the right to help put her on a budget or demand rent and contributions to expenses. If you act grown, you get treated like you're grown.

• Let that boyfriend man up! He's now responsible for helping make a way for your daughter and their baby. He and your daughter should be figuring out how to get her a car.

So while I understand your concern for the baby and your daughter, help usher her into adulthood by not bailing her out.

Q: I have two young adult children who continue to struggle after college with jobs and their finances. They are both back home with me. I do not charge them for rent but I do ask that they save so they can move out and into their own place. Do you think that I should be receiving some kind of financial fee for their lodging?

A: I wouldn't charge them rent if they are saving as much as they can to move. Keep asking for proof. For free lodging they should be willing to show you their savings account balances. Watch what they are doing and their spending. The moment you see that they aren't saving as they should, kick in some rent and rules! They will save and move soon enough.

Michelle Singletary is a personal finance columnist for The Washington Post. Her column runs Sunday.

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