When is it time to stop funding adult children?


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Do you help your adult children financially or turn off the tap? Australian parents give $22 billion a year to their adult children to help them buy property and see them through times when the budget is stretched, according to senior research associate Lisel O'Dwyer, of the University of Adelaide.

So when do you stop supporting your kids? When they finish school? Or do you help them through university, with a deposit for their own home? Or let them live in your investment property at reduced rent?

Parents typically fall into two camps: those who support their kids beyond school into adulthood and those who expect their kids to stand on their own and be independent.

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O'Dwyer says her study, funded by National Seniors, found one third of parents support their kids while two-thirds don't. The big question is: which strategy helps develop financially independent kids?

If you give them too much help, do they expect and demand it? If you don't give them help, will they work out their finances more effectively and be smarter with money. O'Dwyer wants to research this next.

Certainly there are more financial demands on kids now than when I was growing up - uni fees, the cost of technology and high property prices that are beyond the reach of many young people.

O'Dwyer's study shows how parents are stretched, with so much demand on their time and money. In most cases they are helping not only their adult children but their ageing parents at the same time.

They can end up supporting their kids' partners as well. No wonder they are known as the "sandwich generation". A large chunk of help for adult children is in the form of time.

O'Dwyer put a dollar value on it - babysitting and childcare, home maintenance, financial advice, paperwork and much more.

I know plenty of parents who put their kids through private schools when they have a big mortgage, with minimal superannuation and investments.

But just as airlines urge parents to put on their own oxygen mask in an emergency, and then look after their children, you need to get your own finances in order before you help your kids.

If you exhaust your capacity to assist your kids too early, you may not be able to help them down the track. Parents need to be mindful that they will have plenty of their own financial demands as they grow older.

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Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.