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
Property price growth slows in July, but will this downward trend last?
Despite the impacts of lockdowns on the broader economy, the housing market continued to grow in July, albeit showing signs of an impending slow down, new data has revealed. ...Read more
Property
Millennials believe first home buyers need more support
Australia’s up-and-comers in the housing market say more needs to be done to slow rising house prices. ...Read more
Property
3 in 4 borrowers in trouble are in lockdown: ANZ
Despite offering support, ANZ said freezing home loan repayments will be the last resort, as three in four requests for support stem from NSW. ...Read more
Property
RBA gives APRA’s use of macro tools a tick of approval
Ahead of an expected move to impose tougher lending rules on the banks, the Reserve Bank has looked into previous attempts by APRA to cool the housing market. ...Read more
Property
Federal incentives are driving more first home buyers into the market
While property prices continue to grow, new research suggests that the government’s current crop of first home buyer incentives is having an impact on this segment of the market. ...Read more
Property
Why it now costs 130% more to service a mortgage than 3 decades ago
The lifetime cost of owning a home has increased by over 130 per cent in just three decades, new research has revealed. ...Read more
Property
Using the 30/30/3 rule for home buying during uncertain times
Thinking of buying a home? Uncertain economic times may have you double guessing your purchase, but the 30/30/3 rule can help you make this a reality. ...Read more
Property
Rental yields reach decade high, but not all markets move at the same pace
Changing consumer preferences towards lifestyle destinations and a lack of supply have led to record national price growth, albeit price fluctuations vary region-to-region, fresh figures show. ...Read more
The Olympic effect on property and equity investors; COVID-19 Disaster Payments and super
Listen now
Do lockdowns boost property prices? Are short-sellers levelling the playing field? Did you lodge your tax returns early?
Listen now
Will lockdowns halt the housing boom? Is the metaverse taking over? And the cons of lodging your tax returns early
Listen now
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Property
Property price growth slows in July, but will this downward trend last?
Despite the impacts of lockdowns on the broader economy, the housing market continued to grow in July, albeit showing signs of an impending slow down, new data has revealed. ...Read more
Property
Millennials believe first home buyers need more support
Australia’s up-and-comers in the housing market say more needs to be done to slow rising house prices. ...Read more
Property
3 in 4 borrowers in trouble are in lockdown: ANZ
Despite offering support, ANZ said freezing home loan repayments will be the last resort, as three in four requests for support stem from NSW. ...Read more
Property
RBA gives APRA’s use of macro tools a tick of approval
Ahead of an expected move to impose tougher lending rules on the banks, the Reserve Bank has looked into previous attempts by APRA to cool the housing market. ...Read more
Property
Federal incentives are driving more first home buyers into the market
While property prices continue to grow, new research suggests that the government’s current crop of first home buyer incentives is having an impact on this segment of the market. ...Read more
Property
Why it now costs 130% more to service a mortgage than 3 decades ago
The lifetime cost of owning a home has increased by over 130 per cent in just three decades, new research has revealed. ...Read more
Property
Using the 30/30/3 rule for home buying during uncertain times
Thinking of buying a home? Uncertain economic times may have you double guessing your purchase, but the 30/30/3 rule can help you make this a reality. ...Read more
Property
Rental yields reach decade high, but not all markets move at the same pace
Changing consumer preferences towards lifestyle destinations and a lack of supply have led to record national price growth, albeit price fluctuations vary region-to-region, fresh figures show. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
