Having children has always been a financial responsibility, but in the age of student debts, tough housing markets and low entry level wages, this responsibility can sometimes start extending well into adulthood. For many parents who themselves are in a secure financial position, lending a hand to help kids get on their feet either after university, or maybe when hardship strikes later on, can be a great way to work together to get ahead.
However, finding the right balance between supporting your adult offspring and creating a relationship of over dependence is tricky. As parents it’s natural to want to help out as much as possible, but it is imperative that you consider your own financial position and any ramifications of lending.
We will explore what you need to be aware of before offering financial aid and have a look at some of the best ways to help in some common situations.
If you are seriously considering financially aiding an adult child, your first consideration should be how it will impact your own financial stability and any investment plans. While this may sound a little selfish, it really does no one any good for you to ensure the financial security of your children, only to require a bail out yourself when it comes to retirement planning or health costs.
One of the best ways to make sure that your support will not jeopardise your own financial future is to discuss your intentions with a financial adviser. They can help you to determine whether, and how much, you are in a position to gift or lend. Creating a firm budget strategy for how you will help out your children can also help to give everyone a firm understanding of your limits and the plan in place.
Remember that even if you are unable to gift money, there are many non-financial ways that you can still be of assistance. For example:
There are two main areas where adult children often need a helping hand financially:
Let’s have a look at what you should consider and some of the best ways to help out in these situations.
Debt is often a very sensitive issue and one that can cause a range of emotional responses from those affected. It can of course be a great thing, for example getting a mortgage or any sort of investment that will generate long term wealth. However unfortunately through either poor planning or unforeseeable circumstance many young Australians can find themselves owing money urgently.
If your offspring approaches you about help paying off debt there are a few things that you need to know first.
With the Australian housing market exploding in price it can be very challenging for young people to buy a place of their own. This can often be very frustrating and forces young families to continue renting.
As a parent you could be in a position to offer assistance in a number of ways that will help your children to achieve their dream of owning a home.
Making the best decisions for both you and your adult children can be tough and requires a lot of planning. Here at Invest Blue we are passionate about helping people to plan for their future in a way that works for them and the people they love. Get in touch with our team of experts today to get the best advice for you.
What you need to know:
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.