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Bank of Mom and Dad

While everyone else is going back to school, your recent graduate might be heading back to your house. It's not uncommon these days.



How you can help adult children without jeopardizing your own financial future.

With the cost of housing and education continuing to rise in Canada, it’s more difficult for younger generations to get established. While average hourly earnings (adjusted for inflation) rose approximately $3 between 1977 and 2016, average housing prices have more than doubled, and significantly more than doubled in many of Canada’s urban centres.[1] The cost of a university education has almost doubled just since the early 1990s,[2] with tuition rising by 3.7 per cent annually over the past decade.[3]

It should be no surprise then that the number of adults aged 25 and older living with a parent has almost doubled since 1995.[4] In fact, two-thirds of Canadian parents are helping their kids financially, and one in five are assisting with larger purchases, such as a home or post-secondary education.[5]

It’s entirely understandable that parents want to help their children – but does helping leave parents at a disadvantage? Consider that, according to a report by the Financial Planning Standards Council, one-third of parents helping their millennial children pay for post-secondary education say they will have to postpone retirement, and 32 per cent of parents indicate that the financial strain is preventing them from paying off debt.[6]

Here are some tips to make moving your adult children back in a success.

1. Making sure that they have a plan.

Don't let your kid move back home and make no progress in taking the next step in their life. Are they saving for a down payment, do they want to pay down their student loans before purchasing a house. By making sure they have a plan in place allows your child to make progress in taking the next step in their life.

2. Encourage them to work

A lot of recent graduates want to wait for the perfect job that they pictured on graduation day before getting back into the workforce. By getting your recent grad working, they can start to begin saving,  paying down student debt, as well as getting necessary experience and exposure to help them land that dream job. 

3. Helping them save.

Many parents just expect that their children will manage their finances properly. Sit down with your child and go over what they are saving for, how much they will be saving, and when will they be able to achieve their financial goal. A great way to encourage your child to save is if you are in a position where you are able to not charge rent, you can make them contribute to their savings in lieu of paying rent. 

4. Treat them like an adult

The whole reason your recent graduate moved back home is so you can help set them up for the rest of their life. Use this as a learning opportunity to give you child the tools that they will need to be successful. Hold you child responsible, and have conversations with them about retirement planning, budgeting and all the other lessons you wished you had learn when you first started out. By empowering your recent graduate you will be able to successfully transition them into adulthood with all of the tools they need. 

If you have adult children who need financial help from you, make sure that your needs are met first – or you may be the one asking for help from your children later on.

Speak to your advisor today to figure out a suitable solution for you.





© 2019 Manulife. The persons and situations depicted are fictional and their resemblance to anyone living or dead is purely coincidental. This media is for information purposes only and is not intended to provide specific financial, tax, legal, accounting or other advice and should not be relied upon in that regard. Many of the issues discussed will vary by province. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation. E & O E. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Any amount that is allocated to a segregated fund is invested at the risk of the contractholder and may increase or decrease in value.

[1] https://globalnews.ca/news/3854264/boomers-gen-x-millennials-cost-of-living-canada   

[2] Ibid.

[3] www.theglobeandmail.com/investing/personal-finance/article-parents-financially-supporting-thirtysomething-kids-its-happening

[4] Statistics Canada, “Family matters: Adults living with their parents,” The Daily, February 15, 2019, www150.statcan.gc.ca/n1/daily-quotidien/190215/dq190215aeng.htm (accessed May 8, 2019).

[5] www.huffingtonpost.ca/2018/12/13/canadian-parents-financial-help_a_23617433

[6] http://fpsc.ca/docs/default-source/FPSC/children-and-financial-dependency-fpsc-leger-study-2017.pdf

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