My twenty something son, who has a B.A. in anthropology, lives on next to no money. He works shifts at Starbucks and he often doesn’t get 40 hours a week.

But I am in awe of how of how happy he is and how well he lives on so little.  He lives in a $500 rent to income bachelor apartment in downtown Ottawa; he bikes everywhere in the summer and uses public transportation in the winter; he is a vegetarian and cooks with dried lentils and beans and he manages to go to the occasional concert and meet his friends for beer.

We don’t give him money because, not because we can’t afford to, but because we we think it is best for him to fend for himself.                                                                                                                                      

Interestingly enough, he thinks this is the best policy too. He likes his independence and knowing that he can take care of his own needs.

And we know that because we don’t give him money, we have no right to tell him what to do or how to live his life. That works for all of us.

Not that we don’t help at all.  We pay his hockey league fees, we took him on a family holiday last winter and he makes use of our cottage. He could also use our car if he hadn’t had two accidents that pushed our insurance rate to a level we weren’t willing to pay. But we offer these things to our two older daughters who have jobs consistent with their education.

But not all parents are like us.

Rob Carrick, a personal Finance columnist with the Globe and Mail reported on a recent episode of CBC’s The Current that 17 percent of 30 to 33 year olds get help from their parents with the cost of day to day living expenses. He said that while youth unemployment is typically double the national rate, what is unusual today is that young people can only find temporary, not permanent jobs and that they are underemployed. He also said that 75 percent of 25 to 29 year olds have not found a job in their career.

Parents are not only paying for day to day expenses, The Bank of Mom and Dad is paying for big ticket items.

On the same episode of The Current, Laura Parsons, a mortgage expert at the Bank of Montreal (BMO) and mother of two adult children, reported that she has given each of her children over $12,000 towards a down payment for a house.

“We really wanted to make sure that our children started early enough and of course they were not paying someone else’s mortgage but paying their own,” she said.

She said she was willing to give up travel and house renovations to help her children.

Fully 30 per cent of first time house buyers expect their family to help them with a down payment on a house, according to BMO’s research.

My daughters and their husbands, both of whom have professional jobs, own their own homes.  One couple paid the down payment themselves.  My other daughter married a fellow who had already bought a house with a loan from his parents. I recognize both daughters and sons-in-law are lucky and perhaps parental help is the only ticket into the housing market for some young adults.

I also know that I would help any of my kids financially if they were genuinely in need.  But I think the more they can look after themselves, the happier they are.

Visit the CBC podcast to hear the full interview.

My son gave me his permission to post this article.

What’s your experience?  Are you helping your adult children financially?  I would love to receive a note from you in the Reply Box below.     

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Lessons Learned, The Bank of Mom and Dad
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Join the conversation! 6 Comments

  1. I feel this is the way a lot of families are working now. I work in investments and frequently hear stories from clients who are redeeming investments to help out their children with a down payment. I also see that its definitely easier for those who are part of a couple; singles have a much harder time. They can “make ends meet” but can’t put anything away to save for the house or vacations. But in some ways, I don’t think things have changed that much. My parents gave us a leg up when we needed it, and I’m happy to help my children, if we see they need help. I think this is the base of families. FL

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  2. There are at least two points of view on this. On the one hand, no one wants to pull a “King Lear” and foolishly give away your own future financial stability; on the other, as one of my friends says, “you can pass on your money with warm hands, or with cold ones.” That is, while you are alive to see the difference it makes, or after you are gone.
    I agree wholeheartedly that you need to let your adult children find their own way. Our position was always one of “we’ll make sure you get a debt-free education (the best gift in the world we figure), but after that, you’re on your own”. They had to work and contribute to that debt-free education. From their very first jobs (paper route, babysitting, junior coach), we made them put 10% of what they earned away in “long term savings” which we matched to show them the power of compounding interest, and 40% into their education fund. They could spend the other 50%. They had to have jobs in the summer while at university, even if they were McJobs. This in itself was an incentive to get some credentials.
    And so they learned to save, and not run up credit card debt. We are lucky that they have married lovely spouses who are also financially responsible, and have managed to buy small first homes.
    But with expanding families, they wanted to make the move to more spacious houses. We decided we would give them an advance on their inheritance, now. We gave them a significant amount, essentially as an interest free, non-repayable loan, to help them finance larger homes. The only caveat, in writing, is if we need some more financial help with nursing care in our later years, then they might have to pay it back. But we think we have sufficient funds still to manage that without any repayment. So we really do think it’s an advance on their inheritance. We figure they can use the money more effectively now than twenty five or thirty years when hopefully they will have their kids off the payroll!
    We ourselves were helped by a small inheritance from my husband’s grandmother’s estate at just this time in our lives (when mortgage rates were at 12 and 14%, remember?!). It made a big difference to us when we needed more space but were just making ends meet.

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  3. I’m with you on this one. I think it helps them develop their own sense of self-reliance and self esteem when they can create their life on their own. My daughter is living on her own at 22, finishing up college. The only thing I pay for is her cell phone because it was already part of our family package and I want her to be able to reach me if she needs me. Other than that, she is independent and likes it that way. She comes to me for other kinds of help and advice when she wants it.

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