Over the last decade, we have seen more parents providing financial help to their Gen Z or millennial kids, from covering bills to allowing them to move back home to helping with down payments.
However, helping with these costs seems to be old news. According to Rob Carrick, Personal Finance Columnist with The Globe and Mail, the next stage of parenting costs is enabling kids to afford to live in their homes, not just buy them.
Carrick surveyed 1,116 parents about the financial assistance they provide to their twenty- and thirty-something children. He found that 40% of parents surveyed said that they were contributing money to housing costs—including mortgage renewals, renovations, property taxes, or insurance—after their adult children purchased their own home (Source: The Globe and Mail).
When we were growing up, we never dreamed of asking our parents for financial help. Once we were out of the house, it was clear they felt their job was done.
So what changed?
According to Carrick, we are seeing a new style of parenting emerging. Parents seem to be more involved in their children’s lives than ever before. And that does not stop when they leave the house.
Parents who helped their children get into the housing market may also feel some sense of responsibility to help them stay there. In these cases, a down payment is just the beginning.
So what is the financial impact on parents?
Carrick’s survey found that one-third of parents said they were having to make compromises in order to offer financial assistance to their kids. 7.5 per cent said they were going into debt or using savings that they had earmarked for other purposes, like going on vacation. One respondent even told Carrick that he was working longer to help his kids get into—and stay in—the housing market.
It would seem that previous generations of parents who have struggled and sacrificed do not want their children to have to do the same. They want their kids to go further and do better than they did. And they are willing to financially contribute—and keep contributing—to see it happen.
That brings us to the question . . . Is the next frontier in parenting costs helping your kids retire?
Anecdotally, we are already seeing it happen. Parents are setting up RRSP and TFSA accounts for their children, as well as giving them the money for contributions.
As parents ourselves, we believe that one of the biggest responsibilities we have is to educate our children how to be good adults. That includes helping them understand the full cost of owning a house—including furniture, mortgage payments, insurance, property taxes, and maintenance—before getting into the market. That does not mean refusing to help when they need it. It means ensuring they are as prepared as possible before making a big financial decision. It means trying to make sure they do not bite off more than they can chew.
One of our goals at the Popowich Karmali Advisory Group is to give you the advice you need so that you can do everything you want to do—including helping your children—without sacrificing your retirement.
Learn more about how we can help by attending our upcoming seminar!
Tuesday, March 5, 7 pm at The Carriage HouseRegister here.