Category Archives: Financial/budgeting tips

23% of British baby boomers financially support adult kids

According to an article in the Telegraph:

One in four – 23 per cent – give regular financial help to their grown-up children and seven per cent have adult offspring living with them who don’t contribute financially to the household.

As we discuss in our book, it’s inappropriate — potentially even damaging — for adults to live at home without making some sort of financial contribution to the household. Even if they can’t pay market rent, it’s important for your adult children’s self esteem to feel they are contributing, and it’s important for you to have help with the additional expenses (electricity, gas, phone) you incur because of the extra person living in your home. You can read some of our tips here.

FHA reform bill may help your adult children buy a home

With housing costs way out of reach for many young adults, especially in the face of the current economic crisis, often the only way for adult children to get out of the parental home is with a significant “bail-out” from mom and dad.

Peter G. Miller, author of Common-Sense Mortgage, has a suggestion for a better way to help your adult kids buy a home:

As a parent you can always give a gift to a child to help them buy a home. But a “gift” is something that you don’t get back and doesn’t pay interest, not an option for a lot of families that are not among the rich and famous.

Under the new FHA package, however, there is a delightful option: You can give the children a loan and it will count as “cash” for FHA downpayment purposes.

This is likely to be a better idea for most parents than an outright gift. You can structure the loan as you like, maybe not requiring payments or interest for awhile, or maybe not requiring repayment after so many years. And you can forgive the debt in your estate, if you want.

You can read the rest of his article here.

Lessons learned from "The Nest"

We told you about an Australian reality show called “The Nest” that dealt with the issue of adult children living at home.

With the show having wrapped, the show’s financial expert has written an article sharing his thoughts on some of the lessons to be learned from the show. Here’s an excerpt:

One of the main reasons adult children continue to live at home is that it gives them a leg-up financially.

Yet none of the adult children on The Nest, including those in their late 20s, were any better off for all the benefits of being subsidised by their parents. Living at home had not made them better money managers. Quite the reverse.

Most had credit card debts. None had any savings to speak of.

Here’s the rub: letting them stay in the parental pad long after their education commitments had finished had hurt them more than it had helped them.

It was clear that the parents were killing their kids with kindness.

In our book, we discuss strategies for setting up financial arrangements that work for all members of your household, including any adult children who may be living at home, so that no on bears too much of a burden and everyone learns about responsibility. You can find our tips here.