Whether they stay at home or leave the nest, there can be financial repercussions for Mums and Dads…
October 1, 2017
The Bank of Mum and Dad has certainly had a mighty good workout in recent years, with adult children are staying at home for longer.
Many parents want their children to leave home, despite fears they can't, or won't.
The most recent figures from the Australian Bureau of Statistics show in 2012-2013, 31 per cent of people aged 18 to 34 had never left home, which had increased from 27 per cent in 2006-07, with the major reason being financial. Chances are, with deteriorating housing affordability, these figures haven’t changed much, with young people staying at home longer to help save a deposit for their own home.
But while house prices are an impediment, interestingly the Galaxy survey found 62 per cent of parents thought spending habits of their offspring were an issue.
Whatever you do to help, consider the financial repercussions for you. Chances are it will affect your future and hinder your retirement.
Research from Canstar has also shockingly found that adult children were borrowing from their parents well into their 30s, not just to buy a home but to pay everyday bills. It found half of over-18s were borrowing money from their parents, with one in five 18 to 37-year-olds borrowing weekly or monthly.
Herein lies one of the answers to getting your offspring to leave the nest – teach them about finances, including the value of money, banking, budgeting and saving, ideally from a very young age.
You should set up a bank account for them early on, which should be the starting point for saving and could provide the beginnings of a house deposit. If they’re already grown and they haven’t yet been educated, start teaching them how to be financially independent now. It’s never too late.
While housing affordability is an issue, perhaps these adult children are just getting it too good, and there’s no great incentive to leave home. Have them pay you board and contribute to everyday household chores, which will prepare them to fly the coop by becoming more responsible.
But to get them to actually bite the bullet and move out, you can try a few things.
One tactic to get the ball rolling is to set a moving day.
The first is to set a moving day deadline. Life skills coach Michele Jones recently advised parents to kick their children out by the age of 20.
If you want them to move into a home they own rather than renting, you can wait until they’ve saved enough of a deposit, but if that’s too far into the future you can help them by either giving or lending them money. Maybe you can even sock away the board they’ve been paying you and give it back in a lump sum so they can use it as a deposit.
Another option is also to offer a family guarantee, which is an increasingly common way for parents to help their adult children get into home ownership. It involves allowing them to use the equity in your home to buy their own home.
Whatever you do to help, consider the financial repercussions for you. Chances are it will affect your future and hinder your retirement. But then again, you can always ask the kids to repay the favour in your later years!
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