Not-so-empty nesters: Millennial parents putting financial future in jeopardy
While many young adults across Canada are turning to the Bank of Mom and Dad for financial support, the head of a St. John's credit counselling agency says parents who are just trying to help their kids could be setting them up for financial failure.
"If we're going to have our kids live at home with us, then there has to be a learning process to come out of that," said Al Antle, the executive director of the Credit Counselling Service of Newfoundland and Labrador.
Each week, Antle consults with clients who are trying to help their children without jeopardizing their own financial future. Some of them, he said, are even putting their retirements on hold to help.
"All kinds of factors work their way into the equation, guilt being one of them," said Antle.
"The other is fear. Parents fear that their children are not going to be as well off as they and there's an element of fact in that concern."
There's no shortage of evidence that many parents can be generous with their kids — even when they're not kids at all.
For instance, a recent survey released by CIBC shows one in four Canadian parents spend more than $500 a month on their adult children. This includes free room and board, groceries and bill payments for cell phones and vehicles.
According to the latest numbers available from Statistics Canada, 44.7 per cent of young adults ages 20 to 29 in the province are living in their parents' home.
Some have never moved out, while others have returned home after being out on their own for a period of time.
Life under Mom's roof
Richelle Abbott, 27, moved back with her mother, Shelley Abbott, after registering for courses at Memorial University in St. John's.
Abbott's sister, Katelyn, 24, also lives at home. Both are in that generation that is moving between full-time school and full-time work.
While living with their mom has put a damper on their social lives, the sisters said the high cost of living and student loans made the decision to move back home an easy one.
"When you get out on your own, it's a big change because then you have a cell phone bill, TV bill, electricity bill, stuff like that you take for granted." Richelle Abbott said.
Al Antle suggests that if both sisters were to move out and rent an apartment to share, they could expect to pay about $1,000 a month on rent - and that's not including the cost of utilities, food and other expenses.
Shelley Abbott said she's happy to have her daughters living under the same roof, and both pitch in to pay for bills when they can.
"The whole idea is to help them get ahead so they can have enough for a down payment and not have a huge loan at the end of their education."
Keeping kids accountable
Al Antle's advice differs depending on household family dynamics, but his general rule is that no young adult should get a free ride - especially if they're working.
"There needs to be cash contributions and I'm not talking, 'You clean up the living room,'" he said.
"We're talking, 'Your room and board rate is [insert amount here], it is payable on [insert date here] and it's payable in cash.'"
Parents, he said, need to teach money management skills and must hold their young adult children accountable.
"If the goal is to save for a down payment, then on a regular occasion that needs to be evaluated. [Ask] 'Are you saving, how much are you saving?'"
ABOUT THE AUTHOR
