This is a very important and also current question. We hear of ‘The Bank Of Mum & Dad’ all the time, but is this really the reality for most families. Do you do it, should you do it and can you even afford to do it? I’m sure we all want the best for our children but how far should that go and when is it appropriate and when should they fend for themselves. You will no doubt want to leave money long term for your children and providing support will actually be more tax efficient than inheritance later on.
When Young Adults
I think most of us would agree that when the children are going through that difficult transition between childhood and adulthood then we should be there for them. I think it’s extremely rare for a child to hit the age of 16 and be sent out to fend for themselves. So usually we would provide a roof over their head between their teens and early twenties before thinking about asking them to move on. We even hear of some households where grown up kids in their 30s and 40s still have never left home, this is where you really should consider strongly encouraging a bit of independence.
Help With College Or University
If they have chosen to attend college or university then many parents feel a duty to support them through this time. But what level of support is appropriate, if you can afford it should you pay all of their rent and living expenses, this might be a big help but then does having to earn at least some of their keep not teach them valuable life lessons? It’s probably best to strike a balance here.
For The Deposit On A House
This is a big one, we hear of many young people struggling to get on the property ladder. It’s common now to need a 10% deposit or more in some circumstances. You can help them out with this or even provide help by way of a shared ownership mortgage, this way helping them out without actually making it a handout.
To Help Get Out Of Financial Difficulty
Here is a tricky one and it is often the one that can cause most upset and thought for parents. If they have made big financial mistakes is it appropriate to bail them out? On one hand you don’t want them getting in a downward spiral of debts, bad credit and money issues but on the other if they get a bail out will they have learned the lesson of how to manage their money? Tread carefully here and if you do choose to help out make it very clear it is a one off and they need to alter the behavior that got them there.
For The Grand-Children
Saving the best until last and that’s why I’ve left writing about the grand-children to the very end. If you are lucky enough to be furnished with grand-children then, of course, go on and spoil them, that’s your right and role as a grandparent.