It is our human nature to want to give and help others. Nothing makes us feel better than knowing we have been of assistance to someone during a tough time, especially those we hold near and dear. The reality is that we must look after ourselves before we can help others, especially when providing financial assistance.
The bank of Grandpa/Grandma or Mom/Dad is open for business with a high influx of frequent clientele. The benefits: No credit check, no interest, no harassing creditors, and no consequences in the case of deferral. Borrowing from this bank is very enticing, so much so that lenders may find themselves in a position where they are being taken advantage of. Financial abuse is becoming a buzz word; abuse, exploitation, manipulation, mistreatment, cruelty; regardless of your term of choice, we need to realize that seniors are at increased risk.
According to the National Committee for the Prevention of Elder Abuse, the elderly are an attractive target: persons over the age of 50 control over 70% of the nation’s wealth and often do not realize the value of their assets (particularly homes). Additionally, the elderly are viewed as less likely to take action against their abusers as a result of illness or embarrassment, and culprits assume that frail victims will not survive long enough to follow through on legal interventions. It is reported that 1 in 12 seniors have experienced financial abuse, and with a struggling financial climate, predicting future trends is scary.
Currently, debt levels are high, economic growth is modest and the split between rich and poor is wide. Today’s senior population has a significant cautious financial mentality – they are savers. They may not have a lot of money, but they have been prudent and responsible. Unfortunately this mentality is not as prevalent in the younger generations, leaving many people in financial crisis. With bad credit ratings and high debt ratios children and grandchildren are turning to the greatest helpers of all: seniors.
Helping can start by paying to house a loved one and lead to lending money and then guaranteeing or co-signing a loan. The act of signing for another person’s debt involves a legal obligation to make payment on the debt should that person fail to pay. In this situation the transition from helping to abusing occurs when the senior is not in a financial position to lend or repay the entire amount without suffering financial harm or when they have been unwillingly forced. So before we jump to help we need to ask ourselves: Could I afford to give the same amount of money away as a gift?
Helping those we love is one of the greatest joys in life, however there are numerous ways to help others without compromising financial integrity. Always take time to think about your decisions, be cautious and remember there is help available for those experiencing financial difficulty.