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  • Saturday, 24 February 2024
Here's why you should think twice about helping your kids pay their mortgage

Here's why you should think twice about helping your kids pay their mortgage

Recent studies show that an increasing number of parents are helping their adult children pay their mortgage. While this may seem like a generous and supportive gesture, experts warn that it could have significant long-term financial consequences for both parents and children.

According to a survey by the Bank of Montreal, 42% of Canadian parents with adult children say they would help their kids pay for a home, while 31% say they have already provided financial assistance. A separate study by Merrill Lynch found that 25% of Americans aged 18-34 receive help from their parents to pay their rent or mortgage.

While it's understandable that parents want to help their children achieve financial stability and security, experts warn that this can create a dangerous dependence on parental support. By not learning how to manage their own finances and make independent financial decisions, adult children risk being unprepared to face unexpected expenses or setbacks in the future.

Moreover, helping adult children with their mortgage payments can put parents' own financial security at risk. If parents are already in retirement or nearing retirement, they may not have enough savings to cover their own expenses and support their children at the same time. This could force them to dip into their retirement savings or take on debt to make ends meet, which could have serious long-term consequences for their financial well-being.

Financial experts suggest that parents who want to help their children with their mortgage payments should consider setting clear boundaries and expectations from the outset. This could include specifying the amount of financial support they are willing to provide and for how long, as well as discussing other expectations such as regular updates on the state of their child's finances and a plan for how their child will gradually assume more responsibility for their own expenses over time.

Parents should also consider other forms of support that may be more sustainable in the long run, such as helping their child improve their financial literacy, providing guidance on budgeting and saving, or contributing to their child's retirement savings instead of their mortgage.

Ultimately, parents who want to help their adult children achieve financial stability should do so in a way that promotes their child's independence and financial responsibility, while also protecting their own financial well-being. By setting clear boundaries and expectations, providing guidance and support, and encouraging their children to take on more responsibility over time, parents can help their children build a strong foundation for long-term financial success.

 

Recent studies show that an increasing number of parents are helping their adult children pay their mortgage. While this may seem like a generous and supportive gesture, experts warn that it could have significant long-term financial consequences for both parents and children.

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