Smart Ways to Give (or Lend) Money to Family

Keep good records, and don’t hand over money you can’t afford to lose.

(Image credit: (C)2013 Hero Images Inc. All rights reserved. ((C)2013 Hero Images Inc. All rights reserved. (Photographer) - [None])

Parents spend more than $500 billion annually assisting young adults with student loans, housing, groceries, car payments, cell phone bills and other expenses, according to a recent Merrill study. For many families, that largesse is in the form of a gift, but some parents may call it a loan—and treat the transaction as a lesson in money management.

When gifting or lending is done right, it can help young adults get a first home, a car or a college education that they otherwise wouldn’t be able to afford. Or the money may be just what a relative needs to get back on his feet. But done wrong, handouts can undermine a young adult’s independence and generate hard feelings among other family members who don’t get gifts or loans. If it’s a loan that’s never repaid—whether you wrote the check or co-signed for a loan from a lender—it may create a lasting rift with the borrower and potentially leave black marks on your credit history.

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Eileen Ambrose
Senior Editor, Kiplinger's Personal Finance
Ambrose joined Kiplinger in June 2017 from AARP, where she was a writer and senior money editor for more than three years. Before that, she was a personal finance columnist and reporter at The Baltimore Sun, and a reporter and assistant business editor at The Indianapolis Star. Ambrose has a master's degree in journalism from the Medill School of Journalism at Northwestern University, and a bachelor's degree in art history from Indiana University.