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Decisions, Decisions

April 25, 2015

I have always been a firm believer in the child-rearing adage: ‘Give them roots and give them wings’. I suppose that comes from the era, and the environment, in which I was raised.

My family, 1960I grew up as one of five in a household where children weren’t molly-coddled, showered with (unearned) praise, inundated with extravagant gifts, or given handouts. We were expected to earn our meager allowance by doing regular chores around the house (setting and clearing the table, washing dishes, dusting and lemon-oil-polishing the dining room suite, ironing, raking the yard and mowing the lawn), and to work part time from a very young age (I was babysitting my oldest brother’s three boys when I was 11, and taking care of various children around the neighbourhood a year later. When I was 15, I actually put an ad in the local newspaper looking for summer employment – from which I got a job at a variety store in the north end of town). Growing up, we were taught the difference between a ‘want’ and a ‘need’, and we understood that ‘If you don’t have the money in the bank/your wallet, then you can’t afford it’ (a rule I still live by!)

My parents also believed that we should be out of the house and living on our own within six months of securing a full time job, or by the time we were 23, whichever came first. (And if it was the former, then as soon as you landed said job, you were expected to pay room and board – I clearly remember coming home with my first paycheck and my mother putting out her hand for her $15 [25% of my lofty $60 a week salary]). Once you had ‘left home’, you didn’t go back, either – you were expected to manage, no matter the circumstances. You were, after all, an adult!

As grownups, four out of the five of us – at one time or another – sought financial assistance from our parents, but the money provided was always a loan, not a gift; we were expected to pay it back (sometimes with interest). My parents enjoyed a moderate lifestyle because they consistently followed the rules they’d taught us about finances: be smart, be frugal, be practical, and don’t throw your money away on things you don’t need!  (After he retired, Dad used to joke that they were ‘spending the kids’ inheritance’; I’d tell him to go right ahead – he’d earned the money, and he and Mom deserved to spend it any way they wanted!)

An 80s ChristmasWhen my boys were growing up, I admit to ‘spoiling’ them just a little :); like many of my generation, I wanted them to enjoy the things I hadn’t had during my own youth, and I had the financial resources to provide them. We lived in a big house with an over-sized yard and a pool in the back, went on family vacations every year, bought too many toys for birthdays and Christmas, and while I didn’t give them a regular allowance, I rarely said ‘No’ to a request for money to go to the show or the bowling alley or the mini-golf course. At the same time, they had regular chores they were required to do around the house (including their own laundry by the time they were 12), they babysat for the neighbours, volunteered at the local animal shelter, and had part time jobs by the time they were 16 (and half of all the money they earned was required to be put into a savings account for the future!) I like to think they appreciated everything they had growing up, and that they also learned the basic rules of finance (money doesn’t grow on trees – you have to earn it; you have to have it before you can spend it; you should always have a ‘little something’ set aside for a rainy day).

The boys are, of course, both grown up and have been out on their own (and doing pretty well) for many years. But the time has finally come for them to ‘put down roots’ of their own and that has brought me to something of a decision-making crossroads – how much do I ‘help’ them in their quest to find a permanent home and establish a comfortable long term lifestyle?

A Recent ChristmasI’m not one of those people who believes parents ‘owe’ their kids anything. Beyond giving them a safe, loving home (including food and shelter and the other basic necessities of life), a wholesome upbringing (including teaching them the value of honesty, courtesy, morality, and good manners), a proper education (through one post secondary degree or diploma), and common-sense advice and guidance (on everything else), I believe that once they reach adulthood, they should manage on their own. That’s not to say I’m not there to help them over the odd rough patch, or am unwilling to provide counsel or assistance when they ask, but the ‘give them wings’ part of parenting (in my opinion) means they can’t come running home every time the going gets tough, or ask for money because they’ve foolishly misspent their wages (or quit their job without having another one to go to), or expect me to buy them a car, or pay their rent, or spring for groceries because the cupboard is bare. (It’s important to say here that my boys have never done any of these things; however, I’ve watched as family and friends have repeatedly paid for multiple college degrees, trips to Europe, exotic vacations, cars, rent, the down payment on a house, general and sundry bills, expensive weddings, etc. for their offspring – oftentimes putting their own financial futures in jeopardy in order to ‘bail out’ their grown children.)

So, as one son starts the process of searching for a house to buy for his growing family, and the other plans a wedding (with house hunting a few years down the road, but anticipated), and my husband and I look forward to his retirement (in two years time), I find myself in a quandary as to how and where to allocate the funds I’ve spent the last several decades accumulating (I’m hardly rich, but I’ve managed my money well and according to the ‘rules’ my parents instilled in me, and I’m in reasonably good shape). I definitely plan to (as Dad used to say), ‘spend the kids’ inheritance’, but I also want to be able to give them a ‘leg up’ in this tight job and housing market. The question is – by how much and on what terms?

An average house (2015)According to a recent Canadian bank’s ‘Home Buying Report’, 40% of first time buyers said they couldn’t afford a home without financial help from their parents (or other relatives). In order to meet the Canadian Mortgage and Housing Corporation’s ‘20% down’ requirement (if you don’t want to pay a significant additional fee for ‘mortgage insurance’), my son will need nearly $60,000 in order to purchase an ‘average’ (3 bedroom) home in his preferred area (house prices in other areas of southern Ontario are similar, or higher – in my neighbourhood, for example, a basic three bedroom bungalow sells for $700,000 or more). How many young couples can save sixty grand when they’re earning (on average) $50,000 – $60,000 a year and paying $1,500 a month for rent? It certainly seems like the ‘Bank of Mom and/or Dad’ is their only option if they want to get into the housing market.

Tip MoneyBut do I just hand over the money (as a ‘gift’ and/or ‘advance on their inheritance’)? Do I attach some sort of stipulation to it (e.g., pay off your credit card debt first)? Or do I offer it as a loan (with or without interest; with or without a specified term)?  Do I make them sit through a ‘lecture’ about finances before I hand over the cheque (whether they want to hear it or not)? Do I ask for some sort of assurance that they actually, honestly, without-a-doubt appreciate what it took for me to earn (and save) that amount of money, and understand its true value (in the long term)? Do I give it to them even if they might not be entirely appreciative of my ‘involvement’ in the process of buying their first home (I know I wanted to do it entirely on my own, as proof that I was a grown up and could take that major step without my parents’ involvement/advice)? And how do I make it clear that this is a ‘one time only’ offer – that the ‘Bank of Mom’ isn’t going to keep handing over money if they make poor choices about future expenditures, or decide they want to ‘move up’ and can’t afford it (or the supposed housing ‘bubble’ bursts or interest rates rise and they’re overextended)? How, ultimately, do I ‘do the right thing’ without feeling like I’m going against the very tenets of financial planning (and security) my father drilled into me so effectively?

I suppose, in the end, it will come down to what the boys are ultimately ‘comfortable’ with – whether they want to ‘go it alone’ or accept my help (and money) or some combination of the two. In the meantime, I’ll just keep trying to keep up with the never ending changes that are happening all around me here on … the other side of 55.

 

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14 Comments
  1. April 27, 2015 8:04 pm

    Sometimes you just have to give the money outright, not as a loan, but as a gift. And a gift has no stipulation. That was my father’s advice, and I’ve always followed it.

    • April 28, 2015 9:03 am

      I don’t think I really ever seriously considered the ‘loan’ idea; the only stipulation I will put on the ‘gift’ is that they use the money responsibly (which, knowing my kids, won’t be a problem!)

      • April 28, 2015 9:23 am

        Yes, using it responsibly is very important.andyou absolutely can tell them what you would like it to be used for.

  2. April 26, 2015 10:17 am

    I believe you’ve raised your kids well but in today’s housing market, what to do? Housing is outrageously expensive. I did everything on my own, but it was a different time back then. We were five siblings and Dad couldn’t afford to hand out money to five.
    I had only one daughter and upon retirement I realized it was crazy to live in a big house all by myself and cooked up a plan to sell and have my daughter and her family do the same and all move in together. The plan isn’t perfect but it works for me with reduced monthly cash flow. I’m not sure they appreciate how well off they are. ❤ ❤ On the other hand, it's nice to be close to my grandchildren.

    • April 26, 2015 10:56 am

      I’m glad you’ve found a compromise that works for you; I’m already reconsidering where we might retire to, in order to be closer to my granddaughter. As for ‘funding’ my son’s house purchase, maybe I could put a ‘stipulation’ on it that says they have to take me in when I’m old(er) and alone and tired of living in the country. LOL!

      • April 26, 2015 6:45 pm

        It’s not perfect, but it’s more win-win than not.
        Maybe you can nonchalantly feel him out first?

  3. April 25, 2015 9:13 pm

    It sounds like you raised them to be responsible :). If you are wanting to help, and they are asking for it, maybe meet halfway and require at least half to be paid back in a specified amount of time? The other half can be a once in a lifetime gift, not to be repeated.

  4. April 25, 2015 5:56 pm

    Thanks 🙂 If I had the money, I know ‘d just give it all to them, so probably best I don’t have it in the first place. Haha..All the best.

  5. April 25, 2015 3:54 pm

    It sounds like a dilemma; one I will not be faced with as I will have no money to help out my offspring. As a lone parent, the small savings I’ve made over the past 15 years will be spent on helping my two through university and helping me get to their uni interviews/moving in to halls/graduations. By the time my son graduates in 3 or 4 years time I will be broke again.

    • April 25, 2015 4:43 pm

      I know I’m lucky to be in the position of offering some help; I just hope my kids understand how fortunate THEY are that I can. Good luck on seeing your kids through university – that’s another tough step on the road to ‘adulthood’.

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