Robert is a CERTIFIED FINANCIAL PLANNER® professional, a Home Affordability Expert and Blogger for the Huff Post Australia and founder and owner of Life Values Pty Ltd.
Most of the conversations I have had with clients about their adult children are about buying and paying off their first home. Getting into debt is relatively easy, but high home prices and the need to pay it off make the challenge of home ownership more difficult than a generation ago. This is especially true in Sydney where home prices are over 12 times average earnings at the time of writing.
As a result of this, I started helping my clients’ adult children with their own financial life journeys. The biggest complaint I got from clients was the frustration of “they won’t listen to me” or “they listen but don’t do anything”. What parents who say this don’t actually realise is that they are actually giving themselves a compliment. The goal of most parents is to raise independent adults, and that’s exactly what most of them have done. Their adult children wanted their own home but struggled to take advice from parents at a time when they are craving their own freedom and independence.
While offering assistance to their adult kids, my clients were initially worried about putting their own retirement savings at risk. While willing to help their adult children with emotional and financial support, they don’t want to create the expectation of being an open cheque book. The conversations about money are hard to have too. Many parents think their adult kids don’t save enough but worry about talking about money matters with them in fear of hurting the relationship they have with them.
This is where advice and coaching from a qualified financial planner can help. It can be a real circuit breaker. A qualified independent party who is not a family member can bridge that gap. Parents of adult kids want to be confident that their adult child:
Won’t be living at home forever, like their adult kids, parents too want their space and freedom.
Won’t be renting forever, as they see rent as money as money that could be used to pay off a home.
Understands what taking out a loan means for their budget and spending
Can afford to pay off that loan
Realises that the parent’s help isn’t infinite. They need to make the most of any gift and support provided to start their own journey to financial independence.
The first home buying clients I helped through this process was a couple in their 20’s who were in a serious relationship. One of their parents where initial clients of mine. They knew their daughter and her boyfriend were working hard, but felt they had more of a plan for spending than saving. With the encouragement and support of the parents, I met with the couple and we put in place a first home buying plan. Like many Young Australians, this couple weren’t sure what was possible and were delighted that with an increased focus, they could buy and pay off their own home.
Unlike many so-called first home buying coaches, advice is not about getting them into debt as does a mortgage broker or bank lender. The real value of advice is about ensuring they have a realistic plan to repay the debt in a way that still allows them to live a reasonable quality of life. The plan also de-risks any support of parents or grandparents by ensuring they’re not an open cheque book.
The parents have seen the process of advice for their daughter and her partner as transformative. They have increased focus and self esteem when many of their peers are struggling, and their own self-improvement is more than they could have hoped for.
Most young people don’t seek advice because they don’t think financial advice is only for the rich. The truth is, good advice over a life time can dramatically improve a person’s financial well-being and I know from experience that owning a home is more often than not the foundation of longer-term financial independence. The peace of mind this advice brings to concerned parents is priceless.
Robert’s top 3 tips for parents of first home buyers:
Nagging about money never gets you anywhere, especially with self reliant adult children.
If you want to offer help do so, but be clear about what help you’re offering and why you’re offering it.
Use a financial planner as a circuit breaker and offer to pay for the initial advice. It’s important that your adult kids believe in and own their own financial goals if they are to achieve them.