Helping Your Adult Children

We pay a lot of money towards supporting our children even when they're all grown up.

I've done some research into the reliability of third-party research. (Survey of one, conducted on 8 September 2008.) All the respondents (i.e. me) said that most surveys are rubbish, and that articles that use surveys tend to be rubbished pretty darn quickly by writers like me and readers.

As a result, I'm selective of the studies I use in articles. The assumptions must be fair and the surveys must be suitably large for the results drawn. Furthermore, I use these results merely to aid a point, rather than as the main point. This article contains such a study.

Parents spend £21,500 helping their adult children

Parents who are 40 or older spend, on average, £21,500 helping their adult children. The figures were calculated by insurer Liverpool Victoria (LV=) using a survey conducted by YouGov.

YouGov's survey had a decent-sized sample. LV='s part included some assumptions, but these are reasonable so I'm content to use them.

The research found that more than nine in ten parents help their adult children in some way. This isn't at all surprising, as it could be just a few hundred pounds each to tick that box.

The average support of £21,500 isn't surprising either. What is interesting, though, is the spread of help: many, many parents are helping their children with thousands of pounds. It's not just wealthy families.

Financial support from parents of adult children

If you read the details in that table, and not just the figures in bold, you'll notice that huge numbers of parents are helping out substantially. 60% contribute more than £3,000 for a home, 60% contribute more than £1,000 towards savings and 40% contribute £1,000 or more towards a car.

Living costs

The table does not include living costs, but the research by YouGov also found that 55% of parents admitted helping their adult children with this.

I suspect that many of these adult children (but not all) could do more for themselves. Let's see then what guidance you as parents can give them to help reduce the amount of money you need to assist with:

First homes

For most first-time buyers, there's really no chance of help from the Government or anyone else. The collapsing property market will help them, but let's not rely on the uncertainties of the economy.

I suggest you counsel patience. Your children should keep an eye on the market at all times, constantly looking for bargain prices and good mortgage deals. Meanwhile, they should continue to work hard to increase their earning power and save for a deposit. One day, the price of the property, the mortgage deal, their earnings, and the size of the deposit will all align, and they'll be on the ladder. Yes, earlier is better, but there's no rush - not if rushing means buying something they can't afford.

Savings

If you're contributing out of necessity to many of the things in the above table then I bet part of the reason is that your kids have debts. In that case, your contribution should, in most cases, go towards repaying their debts first. This is because they will probably be paying much more in debt interest than they'll receive in savings interest.

Alternatively, say that for every penny they save in debt-interest payments you'll give them the same amount in savings. That'll get them thinking hard about how to reduce their debt-interest bills and get out of debt quickly! The financial skills they learn during this time will serve them well in the future, too.

Investments

If your contribution is for investments then you might want to get them started with a pension. There are pros and cons to pensions [link], but a big pro is that they can't take the money out and spend it next week. This is useful if you think your children shop too much.

First car

Try and save money on their first car with these tips.

Wedding

All I know about weddings is that I'd rather stab myself in the eye than go to another of these boring events. However, fellow writer Serena Cowdy has some tips in The Best Day Of Your Life For Less.

University fees

There isn't much you can do about fees. They have to be paid. However, you might want to consider that university is not essential for young workers to earn a good living anymore, unless their chosen profession requires it. Not many people will argue that degrees are still worth what they were thirty years ago. An extra three years of hard work frequently puts young workers in the same or better position now than their peers who went to university.

University is fun and a degree is of benefit, but try to guide your children to consider all options, and not to go to uni just because everyone else is.

Travelling

Sadly, the study doesn't define 'travelling' properly. Are you parents spending this on your childrens' holidays, on their commutes to work, or so that they have no excuse about making that short trip to visit you?

If you're helping them with their holidays, suggest that they book flights, accommodation and travel insurance separately, rather than through an agent. Hopefully they'll be so grateful for your gift that they'll gladly do as you wished. You never know; children can be grateful sometimes.

> Have your kids compare deals through The Fool.