More young Canadian adults live with their parents than ever previously recorded, according to Statistics Canada, suggesting that 20 to 34-year-olds are moving into their own homes at older ages than previous generations.

Financial Planning Standards Council (FPSC) commissioned Leger to survey the financial dependency of children on their parents. Three-in-ten (31 per cent) said assisting their children of all ages with post secondary costs will, or has, postponed their retirement; 30 per cent said their children were placing a financial strain on the parents; while nearly 40 per cent of parents with millennial children say they intend to assist their kids with the purchase of their first home.

We’re not helping our kids by just providing them with money—the goal is to educate kids to be socially and financially independent.
— Mark Halpern, CFP®

“We’re not helping our kids by just providing them with money—the goal is to educate kids to be socially and financially independent,” says Mark Halpern, CFP, CEO of WEALTHinsurance.com.

He believes it’s essential for parents and financially dependent adult children to have a serious conversation about the duration and level of support.

“It’s important to know how long they can assist their kids as long as it doesn’t come at the expense of their own financial stability. If that happens, then those kids may find themselves financially supporting their elderly parents,” adds Mark.
 

Philosophy vs Pragmatism

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In addition to living costs, one of the areas where many parents support their children is post secondary education.

“How parents view post secondary education varies a lot,” says Ted Rechtshaffen, CFP, president and CEO of TriDelta Financial Partners.

Decisions are often made according to one’s philosophy as a parent. Some parents see it as their responsibility to cover all the costs, others help finance just tuition and some don’t provide any financial support. However, the next big question is: Do you have the financial means to match your philosophy?

A professional financial planner will work with you to understand your philosophy, priorities and your financial situation and will design a plan that balances all those competing interests while also highlighting any potential obstacles that may prevent you from reaching your goals.

While Ted says his personal view is that part of a child’s education is financial education, he concedes that for some people their children’s education is their top priority, even if it negatively impacts their own retirement plans.  
 

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A Teachable Moment

“It can be difficult to understand the impact that providing financial support to adult children can have on parents’ financial future,” says Ted. This is why it’s a good idea “for parents to share their financial plans with their children and show that they are trying to be responsible for their own needs in their retirement years.”

“The whole area of financial education and literacy is not discussed in schools and usually not discussed at home. It’s like osmosis: families expect the children to organically learn how to manage their own financial affairs,” says Mark.

“The most basic part of planning is understanding expenses and budgeting, and that is a big part of going off to college. There are several natural times that present learning opportunities and this is one of them,” says Ted.

In the end, it’s a question of balance between parents’ natural desire to help their children and the need for them to take care of their own financial future. A mutual understanding between parents and children of how to make that work is essential.

A CFP professional can assist families who need to have those difficult conversations about money and help them map out a financial plan.

Find more information on the Children and Financial Dependence survey here.


To find a CFP professional to help you navigate tough financial discussions with family, use our Find Your Planner tool.

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For more on families and money, read How to have “that talk” about money with your spouse and family5 tips for loaning money to family, and 4 ways to get your adult children on the road to financial independence.