Help Children Become Financially Self-Sufficient Adults
Over the last decade, it has become almost normal for parents to help their adult children financially. Some will even take on debt, like a home equity line of credit (HELOC), to do it. Whether it’s gifting a down-payment for a house, paying for post secondary education, allowing working adult kids to live at home rent free, or helping with other lifestyle costs, once parents are retired and their income has gone down, helping can lead to financial trouble.
Look out for your whole family’s financial future by encouraging your children to learn smart money management skills while they still live under your roof.
If you’ve got teens and post-secondary students at home who work part-time jobs, encourage them to save at least half of each pay cheque. Some of that savings should be for their long-term goals, the other part for shorter-term goals like buying a car or saving for education costs. Saving this much of each pay cheque, also known as “paying yourself first,” and budgeting carefully with the rest teaches them to live well below their means, a skill even many adults find extremely difficult to master.
Adjust Lifestyle Choices With a Realistic Spending Plan
If you’re not sure what effect various lifestyle choices and changes will have on your spending plan, try out our interactive budgeting calculator. It can even help you see what your lifestyle will look like on the income you anticipate having once you retire.
Making wise lifestyle choices means spending on what’s truly important to you, rather than on “stuff” to keep up with the Joneses. Living according to a budget is not all about deprivation and limitations. It’s about allocating your money in ways that you want to spend it to achieve your goals. It means checking in with your banker or financial advisor to balance savings between spouses and with the various types of savings accounts available to Canadians, e.g. RRSPs, spousal RRSPs, TFSAs, and various types of non-registered investment types.