Invest
‘Tough love’ needed to protect your savings: Survey
With more than 5 million Australians providing financial support to their adult children, it could be time for some “tough love”, a new survey has suggested.
‘Tough love’ needed to protect your savings: Survey
With more than 5 million Australians providing financial support to their adult children, it could be time for some “tough love”, a new survey has suggested.
Young Australians may have it tough with a changing labour market, longer study periods and a difficult housing landscape, but caring parents need to ensure they don’t provide a safety net out of their own retirement savings, finder.com.au money expert Bessie Hassan has said.
Pointing to a new finder survey revealing 61 per cent of Australian parents support their adult children financially, Ms Hassan said parents need to ensure they don’t keep the training wheels on for too long.
“It can’t always be mum and dad to the rescue,” she said.
“Giving too much support can make it harder for young adults to understand the true value of money, and how to manage financial adversity when things don’t go to plan.”
According to the survey, the most popular form of financial support was giving cash (29 per cent), followed by help with groceries (19 per cent), granting loans for a home or car deposit (16 per cent) and allowing them to live rent free (16 per cent).
“Millennials often get a bad rap for being lazy, but remember young Australians are studying for longer these days, which may delay their entry into the workforce,” Ms Hassan said.
Nevertheless, parents need to recognise that prolonged support can diminish retirement savings.
“Giving your kids some tough love will also ensure you have enough stashed away to enjoy your twilight years,” she said.
“But if your child needs financial support or is living at home due to study commitments, set up a mutually beneficial agreement.”
She suggested parents ask their children to pay board. This has a dual benefit; parents are able to save some more money each week and children develop savings habits.
Additionally, paying your children’s phone bills is a bad idea. It’s important for children to understand the cost of items and become financially fit, she explained.
Setting a budget is another way to teach financial responsibility, and the savings put aside can be put aside for a deposit down the track.
“Whether it’s getting them to help with household chores or contributing to the grocery bill, there are many ways you can teach them good financial habits while continuing to support them,” Ms Hassan said.
The ‘bank of mum and dad’ is a multinational corporation
Mums and dads in ol’ blighty are experiencing the same phenomenon, a report from UK financial services company Legal & General has revealed.
According to Legal & General, nearly one in five over 55-year-olds are “feeling the pinch” after helping their kids enter the property market and have reduced their quality of life to do so.
“It's not Baby Boomers who have made house prices unaffordable for 'generation rent'; it's an acute housing shortage, with a shortfall of over 100,000 homes a year. Unsurprisingly then, we think the key to unlocking homeownership for the next generation is to build more,” the report’s authors contended.
“Another reason why the bank of mum and dad isn't going to fix the housing crisis is that it isn't sustainable. Many older people have worked hard, saved hard and benefited from rising property prices, but their wealth is still limited. There are no government bailouts for the bank of mum and dad.”
Property
Have first home buyers been pushed out of the market?
Latest figures have shown a monthly decline of over 3 per cent in first home buyer activity, but levels still remain at their highest since 2009. ...Read more
Property
‘Optimistic borrowers’ could endanger housing market, RBA says
The Reserve Bank of Australia has issued a caution, noting that optimistic borrowers could lead to a deterioration in the quality of lending, increasing the risk in the housing market. ...Read more
Property
6 out of 8 capital cities have hit record-high dwelling values
CoreLogic’s national home value index increased a further 2.8 per cent at the end of March, placing values 5.6 per cent above the previous market peak in October 2017. ...Read more
Property
Macro-prudential policies a matter of when, not if
The Reserve Bank of Australia has confirmed that it will keep a close eye on trends in housing borrowing given the rising housing prices and low interest rates, with market pundits confident tighter c...Read more
Property
HomeBuilder drives record-breaking housing approvals data
Aussies are no longer able to get their hands on the government’s HomeBuilder program which, judging by the latest stats, has had a great level of success. ...Read more
Property
National home values soar at fastest pace in over 30 years
CoreLogic’s national home value index has recorded its fastest rate of appreciation in over 30 years, with capital cities said to have reclaimed the pole position, having been outpaced by regional m...Read more
Property
Australian house prices soar 500% in 25 years
Australian house prices have surged by as much as 500 per cent in the past 25 years, according to fresh data from REIA. ...Read more
Property
CBD reactivation critical to economic growth
CBD occupancy will be key to maintaining the momentum of Australia’s economic growth now that government stimulus packages are being wound down, the Property Council of Australia has said. ...Read more
Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now
Raging floods, the tech stock bubble and the ongoing SG debate
Listen now
Meet the Manager with Trilogy’s Philip Ryan: RBA rates and property price growth
Listen now
The continued property boom, ethical investing and engaging with your super fund
Listen now
Property
Have first home buyers been pushed out of the market?
Latest figures have shown a monthly decline of over 3 per cent in first home buyer activity, but levels still remain at their highest since 2009. ...Read more
Property
‘Optimistic borrowers’ could endanger housing market, RBA says
The Reserve Bank of Australia has issued a caution, noting that optimistic borrowers could lead to a deterioration in the quality of lending, increasing the risk in the housing market. ...Read more
Property
6 out of 8 capital cities have hit record-high dwelling values
CoreLogic’s national home value index increased a further 2.8 per cent at the end of March, placing values 5.6 per cent above the previous market peak in October 2017. ...Read more
Property
Macro-prudential policies a matter of when, not if
The Reserve Bank of Australia has confirmed that it will keep a close eye on trends in housing borrowing given the rising housing prices and low interest rates, with market pundits confident tighter c...Read more
Property
HomeBuilder drives record-breaking housing approvals data
Aussies are no longer able to get their hands on the government’s HomeBuilder program which, judging by the latest stats, has had a great level of success. ...Read more
Property
National home values soar at fastest pace in over 30 years
CoreLogic’s national home value index has recorded its fastest rate of appreciation in over 30 years, with capital cities said to have reclaimed the pole position, having been outpaced by regional m...Read more
Property
Australian house prices soar 500% in 25 years
Australian house prices have surged by as much as 500 per cent in the past 25 years, according to fresh data from REIA. ...Read more
Property
CBD reactivation critical to economic growth
CBD occupancy will be key to maintaining the momentum of Australia’s economic growth now that government stimulus packages are being wound down, the Property Council of Australia has said. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
