Why you don't have to give your adult kids money
If you're a parent, you've likely debated whether you should support your adult kids financially (and if so, in what way exactly?). Finder research shows that around 44% of parents with adult children help them out financially, chipping in for everything from groceries to mortgage repayments.
So what's the right solution for you and your children?
Let's take a look at the pros and cons of helping your grown-up kids financially - and some tips to help you do it the right way.
Benefits to helping your adult kids financially
There are a number of benefits that come with helping your kids out financially, which vary depending on the kind of financial support you're offering. But one of the biggest benefits is simply having added peace of mind that they're okay.
If you allow your adult kids to live at home rent free, which 17% of Aussie parents are already doing, you'll have peace of mind knowing they're living somewhere safe, secure and comfortable.
Finder data shows 23% of Aussie parents are chipping in for groceries for their adult kids, which can bring comfort knowing they're eating well (and regularly!). In fact, helping pay for groceries is the most common way that parents are helping out their adult kids financially.
Another benefit of supporting your adult kids financially, whatever form that may be, is that it can help them buy their own home sooner. Yes, interest rates are at record lows, but property prices are still high, making it difficult to save up a 20% deposit (that is if you want to avoid Lenders Mortgage Insurance).
If you're helping them reduce their living expenses by offering free rent, money for bills and groceries or free childcare, then they might be able to save up a deposit sooner.
Some risks and downsides to giving your adult kids financial support
Managing your finances and meeting your various bills and expenses is a life skill that can only be learned by practice. One of the risks with helping your adult kids out financially is they don't develop their own money-management skills. If you're suddenly not around to help them out financially or if your own circumstances change and you're no longer able to, you want to know that they'll be able to manage on their own.
Another risk of giving your kids too much financial support is that your own financial position suffers. If you suddenly become unemployed or have a large unexpected expense, you'll want to have your own emergency savings fund available to rely on. You also want to know that you have enough money to fund your retirement.
Tips for supporting your adult kids financially
One way to help them out while also ensuring they develop necessary financial skills is to make sure they're paying board or rent while they're living at home with you (even if this is a reduced amount). Our data shows that 7% of Aussie parents are doing this, and it's a great way to help out your adult kids while also teaching them how to manage their expenses.
Instead of simply giving them money towards a house deposit, another way to help them get into their own home sooner is to loan them some money. This way, they're able to get their foot on the property ladder and take advantage of low interest rates, but they're still required to put a plan in place to pay the money back to you.
Or, if you don't have cash to loan them for a deposit or this doesn't feel like the right solution for you, you can instead choose to act as guarantor for their home loan.
Lastly, you don't always need to offer money to help out your kids financially. Our data shows that 9% of Aussie parents help out their adult kids by offering their time in the form of free childcare. Similarly, things like picking the kids up from school or cooking weekly meals are ways you can offer support without offering money.
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