Money + Love Part V: Family Loans & Aging Parents

About the Episode

Considering lending money to a family member? You’ll want to listen to this episode of Making it Count first! Cristina and Will invite Juan Velasco, a Member Experience and Sales Specialist at Addition Financial and Jennifer Lee, the Founder of Modern Wealth to share their thoughts on mixing money with family. This episode covers the risks and rewards of lending money to a family member, how to talk to your parents about their long-term care plan and how to help your child navigate student loans.

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Cristina asks Question 1: “Juan, have you ever borrowed money from your family or let other people borrow from you? Is there any upside to loaning money to a family member?”

Juan responds: “I have let other people borrow from me. There is an upside to letting a relative borrow your money. It’s important to remember that the money you’re loaning someone shouldn’t be something you’ll need in the near future. You should also keep in mind there’s a good chance that money may never return. Loaning money to a family member out of pure love is great, but make sure to be self-sustainable before loaning that money.”

“I have let someone borrow money before. It was to a family member who had a broken down car. We ended up setting some parameters, which is very important when you’re loaning money to a family member. Set expectations before finalizing the loan and be very precise with the payment. If you can, put it in writing. The greatest upside is having that rewarding feeling when you help a family member.”


Will asks Question 2: “My question is for you Jennifer, and it’s the opposite of Cristina’s question. What are the downsides and risks of lending to family members?”

Jennifer responds: “If a family member isn’t able to get a loan at a bank, they will probably have difficulty paying back any loan. Before lending money to a family member, you should consider what the loan is for and their ability to pay off the loan. The biggest risk is that you might never get your money back. Resentment is another risk that comes with lending to family members.”


Cristina as Question 3: “Juan, what about parents co-signing their kids’ student loans? Is it a good idea?”

Juan responds: “Parents and students should be aware of the financial assistance available to them before getting a loan. Not only financial aid assistance, but also scholarships. There is a tremendous amount of resources that any college student can access. There are so many scholarships that people are getting money just because they were the only ones who applied. My recommendation is to consider cosigning for your children, but really make sure your child is informed about the different financial resources available.”

“Student loans will often cover living expenses which may not be applicable to your child’s situation if they live with you. This leads them to incur unnecessary debt which is another factor to consider before getting a student loan.”

Read More: 4 Benefits to Refinancing Student Loans After Graduation


Will asks Question 4: “Jennifer, if people do want to co-sign their children’s student loans, what are some pointers for a smooth experience?”

Jennifer responds: “You have to remember that your college student is still a kid. There are studies that say that the adult brain doesn’t fully develop until the age of 21 to 24 depending on gender. You should sit down and have an open conversation with your child about what co-signing means and what a big responsibility it is to take out a loan. You should talk through any anxiety or concern on either side and make sure that everybody understands what to expect.”

“Aside from pursuing the typical university grants and scholarships, state programs, civic organizations and church groups are another great resource for scholarships. In my freshman year of college, I had a friend who was not claimed as a dependent by his parents. Therefore, his parents didn’t need to cosign on his student loan during his sophomore, junior and senior year. Before co-signing on your child’s loan, you should make sure they’re serious about their education. You want to make sure those dollars are going toward a good use.”

Read More: The Pros and Cons of Getting a Credit Card with a Cosigner


Cristina asks Question 5: “Juan, I know some parents who have agreed to pay back everything for their child’s education. Is that something you would recommend?”

Juan responds: “Parents should consider where this mentality is coming from before making the decision to pay for their child’s education. For example, is it coming from a place of pride or do you finally feel affluent enough to take on this financial burden? If it’s coming from a place of pride then absolutely not. You want to be careful about compromising your budget, especially if you’re planning for retirement.”


Will asks Question 6: “That leads me right into my next question at the other end of parent/child money discussions. Jennifer, what are some pointers to help people talk to aging parents about money?”

Jennifer responds: “This is a touchy subject all around. I’ll often find myself coaching my clients on how to talk to their parents and their kids about these topics. On either end of the spectrum, neither is easy to talk about.”

“Conversations with parents who have adequate resources may involve gifting, charitable donations and legacy planning. You may want to talk to them about their annual gifting habits to their children and grandchildren. Long-term care insurance is another topic to discuss. I often talk about lifestyle and quality of life with my clients. The other end of the spectrum involves conversations about managing budget and children pitching in to pay for medical, lifestyle and maintenance expenses. Ask your parents how they feel about money and if they need extra help.”

Listen Now: Real Talk: Why You Need an Estate Plan in 2021


Cristina asks Question 7: “Building on that, Juan, what are some of the specific financial topics people should bring up with their parents?”

Juan responds: “Going back to our conversation about student loans, I think it’s also important for parents to evaluate what kind of school their child is choosing. Public schools are much more affordable than private schools. As far as having the tough conversations with your parents, you should tread lightly with this topic, especially depending on the relationship you have with them. Whatever the case may be, it’s crucial to get all the siblings involved.”


Will asks Question 8: “In the intro we talked about the so-called sandwich generation: people with aging parents who are still raising kids of their own. Jennifer, what are some of the challenges facing that generation in terms of money – and what advice can you offer people in that situation?”

Jennifer responds: “Prioritize yourself first. When you think about the sandwich generation, you’re being pulled in two directions. Not only do you have to take care of yourself in the middle, but you have to take care of your children and your aging parents. If you’re not financially stable and you can’t save up for retirement, then you can’t be helping anybody else.”

“It’s all about starting early in your planning. You got the tuition on one side and the long term care on the other. Hopefully, you are getting some good financial advice in your life, especially from a financial advisor. You should also start educating your kids about money so they can help you better in the future.”

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Cristina asks Question 9: “Juan, what are some ways that people can broach the subject and get their parents to a place where they’re willing to discuss money?”

Juan responds: “Try to come from a place of love instead of judgement when you approach your parents about money. Make sure your parents are aware of their options without stressing them out. Be patient and show them you care about their future and wellbeing.”


Will asks Question 10: “Okay, last question before our quickfire round. Jennifer, when do you think parents should start talking to their kids about things like retirement planning?”

Jennifer responds: “As early as possible you should talk with your kids about money, but maybe not retirement because they can’t absorb it yet."

"As the aunt of nine children, one time I saw my nieces and nephews struggling to understand the difference between a five dollar bill and a one dollar bill. Afterward, I went to the bank and got some change to teach them how money works."

"I like to tell a story that when you’re saving money each month in a 401k or a savings account, you’re putting money aside to buy nuts, bolts, sheet metal, and chains to


sheets, bolts and chains to build a little machine. Now, if you put a little bit of money away, you can build a small machine. If you put more money away, you can build a medium-sized machine. If you put a lot away, you get a big machine. The idea is that when you build this machine you don’t touch it because you want it to continue and grow while you’re working.”

“And when you retire, you turn off the light switch in your office and you call your advisor to turn on your machine. And the machine kicks out money. This is a concept that kids can understand. Advising them to put 10% to 12% of their money away immediately, educating them about wants versus needs can help them become more financially educated. You should communicate to them that money is a tool that provides opportunities and lifestyle choices.”

Read More: 8 Personal Finance & Money Management Habits for Kids & Teenagers


Cristina asks Quick Question 1: “Juan, my question is for you. What would you recommend people include in a written agreement when they loan money to a family member?”

Juan responds: “It’s best to include the amount loaned, the interest rate and when you expect to get paid back. I recommend using a due date instead of monthly payments if you’re loaning someone a small amount of money. Setting up these expectations on paper will probably be the best way to go, that way you will have something to refer back to in the future.”


Will asks Quick Question 2: “Okay, Jennifer, what can people do if they feel their parents haven’t made adequate preparations for retirement? That seems like a really tricky situation!”

Jennifer responds: “It’s a terrifying reality, but it happens all the time. Depending on their age and their ability to work, it might mean changing up their living situation. They might have to move into a less expensive apartment, sell their home or move in with you.”


Cristina asks Quick Question 3: “Juan, this one’s just for fun. Did you ever make a financial request of your parents that you realize now was ridiculous or impractical? What was it?”

Juan responds: “I come from a very humble family, and I remember owning my first pair of Nike’s at the age of eight. My mom had to make monthly payments on them because of the situation we were in. That’s why I’ve always been conscious about money and I never really ask for anything.”


Will asks Quick Question 4: "Kids sometimes have funny ideas about money. What was something you believed as a kid that you find amusing today?”

Jennifer responds: “I didn’t really have any funny ideas about money as a child. I remember being in kindergarten and selling candy bars in the back of the school bus to feed my own hunger. However, I do have a funny story about my grandfather that relates to money. My grandfather was first generation Chinese and he owned a restaurant. He had a huge distrust of financial institutions and banks so he would keep his money in the rafters in the back of the restaurant. I thought that was pretty fascinating as a child.”


Juan Velasco is a Member Experience and Sales Specialist at Addition Financial. For any financial assistance, you can call him directly at 407-896-9411 with the extension 3035.

Jennifer Lee is the Founder of Modern Wealth. To connect with her, you can visit her website at or you can email her directly at


In this episode, Cristina and Will shared a season two episode called Real Talk: Why You Need an Estate Plan in 2021. This episode reviews the basics of estate planning and how to start protecting your assets and more.

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