My Adult Child is Struggling, Should I Help Pay Their Debt?Apr 07, 2016
Parents will always feel a certain obligation to do what’s best for their children, even after those kids stop being kids. For the parents of the millennial generation, though, doing what’s best goes beyond providing advice. Increasingly, doing what’s best means providing financial assistance. Faced with generational challenges and a rising cost of living, more young adults in Manitoba are leaning on their parents. They might need help to pay their student debt, a down payment for a house, or even money for groceries.
If you’re a parent in this situation, you may be endangering your own financial well-being by adding to your debt at a time when you should be preparing for retirement. If this is the case, now is a good time to talk as a family about financial limitations.
How can supporting an adult child turn into debt?
An astounding 66 per cent of Canadian parents say they’re feeling the financial pinch due to economic dependence of adult children. This staggering figure extends to the actual money they spend, with one in four spending over $500 a month to pay for their children’s groceries and rent.
For a generation approaching retirement age, every dollar being put towards their child is one less being put away for retirement. It’s not due to laziness, either. Millennials struggle with a lack of solid employment, high housing prices and the rising cost of living. While Manitoba has some of the most progressive tuition rebates in the country, millennials in this province are instead dealing with rising costs elsewhere, like the 21 per cent jump in the cost of fresh vegetables and 12 per cent spike in the cost of internet access.
This means many Manitobans between the ages of 20 and 24 have to delay leaving the nest, unable to afford renting or condominium living. For their parents, this can add emotional and financial stress. Indeed, if your budget is getting tight and supporting your child means taking on debt, it’s important to sit the family down and make honesty the centerpiece.
Broach the subject with a conversation
A 2015 BDO poll revealed that 54 per cent of middle-aged Canadians said they were likely to bend the truth when it comes to their savings or ability to manage in a financial emergency. Of those surveyed, 13 per cent said that they weren’t being honest because it may jeopardize the relationship with a person.
You may be hesitant to broach the subject with your older son or daughter, but if debt has become a problem, it’s important to be open and honest about it. If parents are seeking credit and debt solutions, they should have a conversation with their child about their financial reality, and how both parents and children should seek out strategies available to them.
Make paying down your own debt a priority
After broaching the conversation and readying your family to tighten their belts financially, it’s important to seek out debt relief options available to you and your adult child. Parents paying for their kids’ groceries may have accumulated debt on multiple credit cards. Here, a good solution may be a consolidation loan, which can pay off the debt accumulated on different cards, leaving you with one, easy-to-manage monthly loan payment with a lower interest rate. Debt consolidation is just one option; there are many out there.
For millennials who need help to pay their debt, parents can provide advice rather than financial assistance. Work together to research options for dealing with student loans. Use an online repayment options calculator to see which debt solution might best fit both budget and timeline. An honest conversation is an excellent first step toward developing a long-term debt repayment plan that will reduce financial stress for both you and your adult son or daughter.
Are you in a family with a young adult living at home? Join the conversation on social media by using the hashtag #BDOdebtrelief.