As a parent all you probably want to do is help your kids to reach their goals and live a long and prosperous life, but unfortunately many Baby Boomers are sacrificing their own retirement dreams and dipping into their savings to provide financial assistance to the kids.
It can be hard not to give, give, give when it comes to your children, however there comes a time when you have to bite the bullet and let them go it alone. When that happens and at what age they should take charge of their own finances can depend on a range of factors and the stage of life they are at.
For some adult children they may have managed to save a bucket load, landing a full-time job straight from school, but for others who ventured down the path of further education, the workload can be enormous, meaning that saving can be difficult with less available time to work each week. It is for that reason that Finder Money Expert Bessie Hassan explained it’s best not to set a specific age when you say ‘no’ to providing financial support.
“As most parents know, there’s no cut off date for when you stop helping your kids, whether than be financial or otherwise,” she told Starts at 60. “Some parents may keep helping their kids financially because they are studying or because they are trying to save for a deposit.”
However, Hassan said parents should implement some ground rules to ensure the kids are contributing to their own futures and not solely relying on the Bank of Mum and Dad. The money expert explained establishing good financial literacy is essential for anyone, no matter what stage of life they are in, and kids need to be aware of how to budget and save.
“There are definitely ways to still make sure your children are learning valuable financial lessons,” she said. “For example you could charge board, but be putting it away into a savings account for them. Or if they are still living at home, making sure they are active in helping around the house.”
In Australia charging board is quite normal for families, with Finder research revealing the ideal age to do so is around 18-years-old. As part of the study, 1,015 Aussies were questioned on when is the right time to ask for rent from the kids with various explanations of why parents should enforce the rule.
The majority (52 per cent) agreed it should happen when your child gets a full-time job, while 18 per cent said board shouldn’t be charged and children should instead commit to household chores. A further 14 per cent claimed as soon as they hit 18 was the answer and just 8 per cent explained charging rent is something they would never do.
Things have certainly changed since you were a teen or young adult on this front with most Baby Boomers packing up and leaving the family home as soon as they finished school. Instead of relying on mum or dad to help out, you probably had to fend for yourself, living a frugal lifestyle as taught by your parents and grandparents, to get by.
Nowadays, children are leaning on their parents for financial support for much longer, with a seperate Finder study revealing more than five million Australians are helping their grown-up children financially on a regular basis – and one in five parents are still paying for their offspring’s groceries. Though it may seem absurd, Hassan claimed it’s understandable, given general life is far different for Millennials than what their parents would have experienced.
“A lot changes from generation to generation,” she explained. “In the 1980s university was free, whereas graduates now leave with a sizeable debt. Wage growth has also slowed right down and it’s become more difficult for first home buyers to break into the property market, especially in some capital cities. Adding: “It comes down to making sure your children understand the value of money and practicing the good money habits you’ve instilled.”
Encouraging kids to fend for themselves is important, even if it seems a bit scary and just like any other part of life, mistakes happen and you learn. It can be a bit of a rollercoaster ride but Hassan said through the bumps your children will further develop their finance skills and establish a healthy bank balance to support themselves and possibly their future offspring.
“The best lessons are learnt when you make your own mistakes,” she explained. “When kids start managing their own finances, they’ll quickly learn to always have rent covered and that shouting rounds at the pub often leave you worse off.”
Offering some words of advice for parents concerned about what to do next to support their child’s financial future the money expert added: “We all have our own ways of parenting and do whatever we think is best for our children. In the long run, kids will eventually need to fend for themselves, especially in financial matters. Gradually make small changes so you’re confident your children will be financially stable without your help.”