Are you considering providing financial assistance to your adult children? There are several important factors to consider before making a decision.
With the increasing cost of living, many parents find themselves in the position of financially supporting their adult children. Research from Aldermore bank shows that 19% of parents with grown-up children are providing them with financial assistance, and 33% are tapping into their long-term savings to do so.
One of the main reasons parents are providing financial help is to assist their children in purchasing their first home. A survey by Opinium reveals that nearly 38% of parents have either already assisted or are planning to assist their children with a deposit for their first home.
Alex Myers, the director of savings at Aldermore, stresses the importance of balancing assistance to adult children with consideration for the parents’ own financial goals, such as retirement and long-term care costs. Planning for the future is essential to ensure the financial security of both parents and children.
While providing financial support to children can be rewarding and offer immediate relief, it is important to clarify the intention behind the monetary aid. For some, it may be a gift with no strings attached, while for others, it might be a loan. It is advisable for parents to seek professional advice on gifting allowances to minimize potential inheritance tax implications.
Furthermore, it is worthwhile to explore alternative options aside from direct financial aid. For example, options such as Lifetime ISAs with government bonuses, low deposit mortgages, and family member-backed mortgages could be viable alternatives to directly providing financial assistance.
Considering one’s own financial position is equally important. Parents need to assess their pension and savings, and understand the potential impact of their generosity on their own standard of living and future care costs. Sacrificing one’s financial security for the sake of adult children could lead to unforeseen challenges in the future, such as insufficient retirement funds or the inability to cover long-term care expenses.
Ultimately, while the desire to support adult children is understandable, it is crucial for parents to make well-informed decisions that take into account their own financial well-being. Setting clear boundaries and maintaining a balance between supporting children and securing one’s own financial future is key.
In conclusion, providing financial help to adult children requires careful consideration. By evaluating the long-term implications of such assistance and exploring alternative options, parents can make informed decisions that benefit both their children and themselves in the long run.
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