How much do you help your children financially?
And I don't mean when they're young and can't fend for themselves.
How much do you help your adult children financially?
According to finder.com.au, more than 5 million Australian parents are helping their adult children financially'.
Their new survey found one in six (61%) parents – equivalent to 5 million Australians – support their kids financially, with 22% admitting they simply offer to help.
Sixteen percent of parents help their offspring because their kids struggle to manage their own money.
The research also showed 10% of parents help their adult children because they don’t have a job, while 9% give financial support because their adult kids are already in debt.
Bessie Hassan, Money Expert at finder.com.au explained if parents are always stepping in, their kids may not learn financial independence.
“There's no denying the transition to adulthood can be confronting, especially with the rising cost of living, but leaving the money ‘training wheels’ on for too long can do more harm than good.
“It can’t always be mum and dad to the rescue.
“Giving too much support can make it harder for young adults to understand the true value of money, and how to manage financial adversity when things don’t go to plan,” she said.
Giving cash handouts, buying groceries, and offering a loan for a home deposit or car were popular ways parents help their children.
“Millennials often get a bad rap for being lazy, but remember young Australians are studying for longer these days which may delay their entry into the workforce,” she said.
Eleven percent of parents help their kids because they’re studying, while a further 11% provide support so their kids can save for a house deposit.
Hassan acknowledged that keeping adult children at home for too long may deplete parents’ retirement savings.
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“Giving your kids some tough love will also ensure you have enough stashed away to enjoy your twilight years.
“But if your child needs financial support or is living at home due to study commitments, set up a mutually beneficial agreement.
“Whether it’s getting them to help with household chores or contributing to the grocery bill, there are many ways you can teach them good financial habits while continuing to support them,” she said.
Females were more willing to give cash handouts (31%) compared to males (27%).
However, fathers were more likely to give a loan for a home deposit (12%) compared to 5% of mothers.
Do you have adult kids (aged 18+) and help them out financially? If so, what do you mainly help them with?
|How parents are helping their adult kids||Percentage (%)|
|Giving cash handouts||29%|
|Paying for their groceries||19%|
|Loan for a home or car deposit||16%|
|Allowing them to live rent free||16%|
|Paying their bills (e.g. household, mobile phone)||14%|
|Giving them hand-me-down furniture||12%|
|Charging them low rent (less than $150 per week)||8%|
|Paying for their tertiary education||8%|
|Giving them a hand-me-down car||8%|
|Going guarantor for their home loan||6%|
|Help them pay their mortgage||5%|
|Investing for them||4%|
|Source: finder.com.au survey of 2,011 respondents, July 2018
* Respondents could choose more than one option
How to teach your kids money management skills:
Ask them to pay board: Getting your kids to contribute to the weekly household expenses is a great way to get them into good savings habits.
In the ‘real world’ they might have to pay rent each week to keep a roof over their head, so it’s good to learn this skill now!
It will also help you save some money each week.
Don’t pay for their mobile plan: Your kids need to learn to pay for their own bills without the help of mum and dad.
Get your child to pay for their own mobile phone bill once they turn 18 – this will help them understand the cost of items and help them become more financially responsible.
Help them set a budget: Talk through your kids’ income and expenses and help them determine how much to put aside in savings which could be used for a house deposit a few years down the track.
Suggest putting this into a high-interest savings account so it grows quickly!