Bailing out financially independent children
There should come a stage in life where adult children become financially independent.
For the sake of your Financial Planning, you can hope that this happens sooner rather than later.
But when adult children do fly the nest and stand on their own two feet, it might not always be the end of financial assistance.
According to a new survey, over half of parents report their adult children have drawn from the Bank of Mum & Dad.
These financial withdrawals from the bank that keeps on giving average four times with a value of £6,000.
And this is happening after the adult children have apparently become financially independent.
The research from Experian found that a third of British parents have been put under financial pressure due to bailing out their financially independent children.
With an average bail out of £6,000, these ‘financially independent’ adult children might need a lesson in basic money management skills.
Experian found that 4 in 10 parents with children who asked for financial support were called upon as the child had no emergency fund to call upon during difficult times.
Almost a quarter of parents admitted their child is bad at managing money, running out of money and calling on mum and dad for financial support as a result.
One in five parents have also given their adult children a helping hand onto the property ladder.
Where is this money coming from?
The majority of parents were drawing on their own savings, with fewer having flexibility to draw on their surplus monthly income to help their kids.
Just over one in ten admitted to using a credit card to bail out their children when needed, which is a high cost and potentially risky strategy, especially if monthly repayments cannot be met consistently.
According to Clive Lawson, Managing Director at Experian:
“These results show the extent to which many ‘financially independent’ adults are still struggling to take control of their finances.
“Parents have such a crucial role to play in helping shape children’s attitudes and behaviours towards money but it is a big responsibility and they don’t get enough support.
“Many of us learnt how to manage money well the hard way, but our children can benefit from these lessons if we can find the right way to teach them this essential life skill.”
We agree that personal finance education is vital and something parents can benefit from if the right attitudes towards money and spending behaviours are instilled at an early enough age.
If parents want to reduce the financial pressures associated with having to bail out financially independent adult children, education is a great place to start.[tweet_box]Over half of parents report their adult children have drawn from the Bank of Mum & Dad[/tweet_box]