How much help for young adult children?

[Badger]

Unless the parents shelled out most of that $1.8 million their child at their age can't possibly make enough money to cover the monthly mortgage. If they could then why would they need any help. Another possibility is they cosigned the mortgage and will be on the hook for the payments. Maybe there are other possibilities but it looks like they will not retire any time soon.


Cheers!

 

[wrigley]

A brand new 1500 sf home where I live will cost about $250,000. When my kids are ready to buy, I will help them with the down payment.


I have been to the West Coast a number of times in my life. It's beautiful........but I would never live there!



Mike

 

[Bamaman]

My mother went to work to put my sister and me through college. We were both out in 4 years and on our own from there on.

They traveled the world and got ready to retire 8 years later.

We bought homes on our own with our down payments. And thankfully we have always lived in low COL places where we both could afford large main homes and also lake/mountain homes.

When the birdies are taught to fly, it should be up to them to fly. The parents have to then take care of their future financial needs.

 

[bclover]

Yet another reason to keep the kids thinking we are just scraping by.

lol.


So I'm not going to be a hypocrite, my parents helped me out financially for many things and I did not turn into some entitled jerk, lol without any ambition. so I guess one has to know their own kids.

I've never understood how helping your kids equates to not teaching them how to be self sufficient but that's me.

My husband and my house caught fire when I was pregnant and living on one salary, yes we had insurance but it still cost tens of thousands of dollars to be made whole. My parents gifted us 8,000 bucks at first it was a loan but after the first year they said "Merry Christmas" dont pay us back.

So my standard answer is I help my kids within reason.

for my sons house, questions I asked where
How much is the cost to live in the house (to see if he knew) not just the sales price?
how much will the mortgage? how much of your salary will go to mortgage.

I gave him some money toward his downpayment. He's still a great young adult, hasn't turned into some bum expecting to be waited on hand and foot.

 

[pacergal]

Our budgets were much tighter when we were raising kids. They did not get cars, we did not go on fancy vacations.
We told our kids that we would pay for 2 years community college, and we would help pay back loans after they graduated if we could.
Fast forward and our retirement finances are much better.
We have helped pay off DS college loans, we gave DD $25,000 towards down payment for a house, we helped both with weddings, (and a divorce, unfortunately), unplanned medical bills, and occasional cash gifts.
Neither one expected the help or asked for it. We offered when we knew we could afford it.
They are good kids and prefer to "make it" on their own, but are very appreciative of help.

 

[armor99]

You are not obligated to jeopardize your retirement dreams to help your young adult children buy houses. You already got them to young adulthood, now let them be adults! As others have already noted, if housing is too super expensive out of reach where they live now, you can help them relocate to where they can afford to buy homes, IF home ownership is their absolute number one desire. Otherwise, let them save and scrimp and delay other gratifications for it---or decide home ownership is not the end all and be all of their young adult lives.

Very well said. Challenge forges good people. Too much help is not always kind. Becoming an adult and making your way in this world is a rite of passage. Some help is always good... but the struggle, and the adventure of getting from where they are now financially, to where they will one day be is important. Do not deny them that experience. They will thank you for it later...

 

[tb001]

If they’re helping their kids buy a 1.8m house, they’ve obviously prioritized other things over RE and very likely could RE even with this sort of purchase.

In our case, we’re planning to pay for college at a state school. If our kids got into a top tier private school, we would probably stretch to help. After that, we’re not setting aside specific funds to help.

That said, unless we’re in a really bad retirement scenario, we expect to have more than enough to help if it makes sense. That would not include buying a 25yr old a 1.8m house. Even in the Bay Area, that’s nuts and imo does no favors to the child. She would be better off living where people her age can afford to live. I would help our kids with a down payment on a house in a heartbeat if I could, but not one like that.

 

[Souschef]

Yet another reason to keep the kids thinking we are just scraping by.

This is funny because one of my sons recently asked if we needed any financial help, which we thought was sweet.

I thanked him for his offer, but told him we were doing OK.

 

[travelover]

lol.


So I'm not going to be a hypocrite, my parents helped me out financially for many things and I did not turn into some entitled jerk, lol without any ambition. so I guess one has to know their own kids.

...........

It was said some what tongue in cheek. Of course we'd help in an emergency and even helped with a house down payment, but funding luxuries to keep up with the Jones is not in our budget.

 

[bclover]

It was said some what tongue in cheek. Of course we'd help in an emergency and even helped with a house down payment, but funding luxuries to keep up with the Jones is not in our budget.

noted. I just some times giggle at these hard and fast rules people come up with.
My favorite is how you should make kids pay their own tuition so they have some "skin in the game".

Yeah I had skin in the game, it was called my dads service revolver, lol he use to always say "I don't give a damn about your mind, my money is a terrible thing to waste". I will hurt you if you waste my money. I believed him.

my oldest kid is an asperger kid, what I was going to force him to get a job as some sort of parenting "rite of passage". he would have dropped out from the stress. oh yeah that will teach him. really did not see the wisdom in that.

like I said, I'm more of a "know your kid" type of gal. by the time a kid gets to be a young adult 25+ most folks will have a good idea of the type of individual they are.


lastly my faith says that I should be doing things that will benefit 3 or 4 generations, that was the mindset in my family, so helping the kids is rather expected. sort of like the wedding scene in "My big fat Greek wedding" where the parents gift them with their own house. helping your kid open a business or buy their first house is not unusual

But op, I'm on the same page as every one else, only help in the amount that will not endanger your situation. Non negotiable

 

[Maenad]

It very much depends on the personalities of the kids, but I can definitely advise not endangering your own financial goals in order to give your kids Economic Outpatient Care.

DH and I had almost polar opposite experiences - my parents paid for my college education, gave DH (before we were married!) a zero-interest car loan, gave us a zero-interest loan to help out with our first house downpayment, and gave us my inheritance (childhood home) when I was about 30. My brother has received similar generosity.

My in-laws gave DH... very little. They were gracious (!) enough to let him rent a room with either of them for reduced rent, but that was it. His brother had the same deal.

DH and I both ended up working hard, earning $$ as engineers, and retiring in our mid-40s. My brother, who received EOC like I did, is financially sound. My BIL, who got the same "package" as DH, is a shiftless layabout. So, it can vary tremendously.

 

[mpeirce]

...or maybe consider equity sharing.

My take is that kids need to be develop independence. Dependance can have a variety of bad outcomes both financial and interpersonal.

We did help DD with her first home, but it was a grant not a loan. And it was also a one time thing. We're not giving her anything more as she tries to move up to a bigger place. She has a nice small place, if she wants a nicer place, that's truly up to her and her husband to figure out how to make it work and make the tradeoffs that make sense for them.

OTOH, I actually did go halves with my DM so she could afford a nice small coop in Florida. But I'm a lot less concerned with developing her character - she is what she is at this point!

 

[Music Lover]

I live in the Bay Area where housing costs are insane. My neighbor is giving a ton of help so their 25 year old daughter can buy a $1.8M house (it's a 1500 sq ft. starter home, not extravagant).

A $1.8 million 1500 sq ft house is not a starter home either by price or by size.

 

[mpeirce]

My in-laws gave DH... very little. They were gracious (!) enough to let him rent a room with either of them for reduced rent, but that was it. His brother had the same deal.

My DM also charged me rent one summer I came home from college. I was working, so OK. That was definitely the last time I lived at home...

 

[prudent_one]

Help those who need it so they have the necessities of daily living as long as they are doing their part. Perhaps "extra" help for targeted things (pay for a economical vacation in Europe that one hopes is educational and enriching especially for a young adult) that they could not do otherwise. No help for affording a bigger place to live, a nicer car, or expensive toys.

I think it's important for young adults to work for what they want. I'm surely biased as I saw cousins, when they were younger, leech from their pushover father for many years just for "wants". Later, more leeching for their own kids' benefit (the cousins squander everything, then oh, woe is us, my kid can't afford a reliable car to get to his part-time job, we're too poor...) Then as father's reserves went low, privately grumbling that the inheritance was going to be a lot smaller than they were expecting. I can hardly look those shameless moochers in the face these days. This really colors how I look at supporting young adults and the risk of making them lazy and entitled.

But of course, one must know their children well enough to determine if help will be productive or wasteful.

 

[Cobra9777]

My parents didn't have the means to help me in any form. Only exception was during the first couple years of undergrad, they were sometimes able to send me $200-300 at the beginning of each semester to help with tuition. Otherwise, I supported myself through 7.5 years of college, including cars and our first house while I was still in grad school.

With our kids, we paid all tuition, fees, and housing during college. They worked summers, internships, and part-time during school for spending money. Once graduated and employed, we bought them each a new car. A few years later, we helped each of them with the downpayment on their first house. They had enough down to get approved, but we added whatever was needed to get them to 20%.

They are now 31 and 28. They each have great jobs and know how to manage money quite well, including saving and LBYM. We were happy to be able to help early on, which got them off to a fast start. This had no effect on our retirement finances. And certainly no effect on their attitude about money.

We had planned for the cars, almost like part of their college cost. It was an incentive to finish school quickly and get a job. The house downpayments were not planned but not a burden at all. I'd much rather help out now, when they are young, rather than inheriting a bunch of money later when they don't need it.

 

[rkser]

We would think twice about helping our kids if funding our retirement was in any danger, but our situation is far different from that.

We have more than enough wealth we could ever need or want for our lifetimes. As we were frugal when we were young(we still are) & saved regularly the totals are what they are now. First world problem, or result of long years of being a Boglehead.

It makes sense in a way to see for ourselves, children using & enjoy the money which they are going to inherit anyway when they possibly will be in their 50s. We do live very comfortably a high middle class lifestyle, but not in a outlandish way(we cannot even when we try), & also do lot of charity as well.

The trick is to give to the kids in a way that their drive is not lost. That is what we discuss & keep working on.

 

[teej1985]

My parents were happy to help me, but they would never co-sign a loan. What's interesting is that you sometimes see the opposite which has the potential to be a much adversely worse affect.


The place I bought, in California, was less than 10% of that Bay Area place though.

 

[Retch The Grate]

My experience with my folks (my family has been UMC since moving back to the US in the late 70s) was that they and my grandfather got us started without debt (college paid for), and after that we were on our own, not that we couldn't go to them in an emergency, but they weren't supporting us, and weren't gifting large amounts of money. Starting about 13 years ago, they decided to start gifting the annual limit but at that point I was 36 and my brother was 33 and we'd demonstrated we were responsible adults. Their explanation is that they would rather give us our inheritance while they are alive to get to enjoy seeing the impact it has on our lives. I'm not really sure there's been any specifically observable by them *impact for me, but if it helps them enjoy my success yay (and I appreciate the positive impact it had on my investment growth over the last decade), and they definitely have helped my formerly much higher earning younger brother out through some cash flow situations where they can see the impact the gifting has had. It certainly made some of my ups and downs of income between 2013 and 2018 far less problematic.

I'm not sure I would have been able to appreciate the money in the same way if they'd just been giving it to me right after college. But I've always been aware what a huge gift my grandfather paying my college tuition was, so maybe I would have appreciated my parents gifting as much back then as I do now...

I don't have kids, but I'd be inclined to do the same thing as my folks, get them started, let them enjoy their early successes on their own (and be a hopefully unneeded safety net) and then start giving later when they'd shown they were responsible with their money, and could really benefit from it. I do feel there is something to be said for the fact that I wanted to increase my salary, AND could really appreciate every extra $5k in salary I was earning in my 20s and early 30s.

 

[Sue J]

We paid for college for both kids, tuition, room and board and books. Neither one had college debt. When the younger son graduated he was self employed as a freelance sound engineer. He had done quite a lot of that while in college and wanted to expand it into a full time career.

So we let him live at home for a few years while he built up his business. He paid us a percentage of his earnings as a contribution to the household and all of his own expenses. He worked a lot, long hours and infrequent days off. He was easy to have around and he was appreciative of the help. He was able to save enough to move out and support himself doing his freelance work. He freelanced for 8 years until one of the companies that he worked for hired him full time.

I feel like this was a good investment because he's the one that made us grandparents in 2018. And they bought a house 9 blocks away.

 

[racy]

My DM also charged me rent one summer I came home from college. I was working, so OK. That was definitely the last time I lived at home...

My DM frequently told us kids that she paid rent to her parents after graduating from high school in the late 1940s. So, we grew up knowing we'd have to take care of ourselves. (Or, maybe I should say, "get to take care of ourselves").

 

[1242Vintage]

We funded all three kids through university, back in January making the very last tuition payment for youngest daughter. Done!

We have a little back pocket plan though. We have a modest size rental home near our current house and if someday one of the kids wants to come back to California we would sell them that house at a very low price. Chances of this happening is extremely low as they are now spread out across the country, settling in Wisconsin, Minnesota and Nevada.

 

[Koolau]

My parents let me stay at home during University. They helped DW and I with our first house.

We've told our kids not to expect an inheritance (of any significant magnitude.) Most will go to charity. BUT, we have helped all the kids with their various houses, wedding, etc. We have sort of a "plan" of how much we will give to the kids while we are still living. After that, we plan on them remaining independent. We were fortunate that we were retired AND comfortable before the kids needed anything. One kid wanted us to co-sign so that he could buy into a business. We said "no" but we'll give you some cash and then "you're on your own." It was a good move. The business failed. We would have been on the hook for unspecified debt. Not something you want in retirement.

In short, we would not do anything at this point to jeopardize retirement as we have no options to make it up. From our ability to help, we will continue to do so. For instance, we are paying for life insurance for each of the kids until we die (or run out of money.)

By the way: Never loan money to your kids (or friends.) It ruins their memories! YMMV

 

[braumeister]

My parents let me stay at home during University.

Pretty common in my circles. The only way I could go to college was if it met two criteria. It had to include a scholarship and it had to be in commuting distance. I was lucky to get the scholarship but the commuting was a bear. One bus, all the way to the end of the line, then two subway trains, each one also to the end of their respective lines. School was at the exact opposite end of NYC from where we lived, so commuting was nearly two hours each way for four years. I got to be really good at doing most of my studying on a crowded train.

But my parents were happy to help as much as they could, since I was the first in my family to get a college education, and I was very grateful for what they did.

 

[livingalmostlarge]

I would like to. But who knows how much money i'll have. So maybe. If we can do it sure. As it stands we are paying for college for sure. And since DH wants to work till after college is done maybe we'll have a ton of extra money. Then sure.