It’s a trend that’s been increasing now for about a decade in Canada. Young adults are facing a difficult market and parents are feeling the impact of this. The 2016 Census reported that just over one-third of young adults aged 20 to 34 in Canada are still living with their parents. That’s 34.7%! But it’s difficult to explain why. One thing we can rule out is that only 9% of young adults in 2012 were the primary caregivers for one of both parents. So it’s not likely the case that children are staying behind to take care of their aging parents.
If you’re finding the former describes your current situation, you’re seriously not alone.
So, what’s changed since your upbringing? Well despite the obvious rising property values, increasing rent and an overall less than opportunist market to enter, we can perhaps also lay the blame on the competitive professional environment, too. But is it also a shift in purchasing habits and priorities?
Last year, Global News reported learnings from a survey by Angus Reid Forum and Capital One. The survey proved that Canadians admit to spending money on things they don’t really need each month. And what’s the most popular indulgence? Of course it’s food. A few other honourable mentions go to online shopping, clothing and beauty services.
The survey also showed that one-third of Canadians admit they don’t put anything into their savings on a monthly basis.
So, how can you help your 20-something-(or 30-something)-year old not be part of this problem? Here are a few mistakes some parents make that you can avoid:
You’re Not Holding Them Accountable
One of the first things to do to get anyone financially fit is to understand their current financial situation. Before you start, understand that money is personal. So, chances are your kid isn’t going to want to lay all their cards on the table for you to judge (even if you’re not the judge-y type). Set the right intention for yourself and understand that having an honest conversation about money might take time, or it might not happen at all.
And that’s okay.
You can motivate your child to take control of their financial situation by discussing some of the resources they have available. Take Mint for example. This is a great app-based tool that gives you the insights about spending habits at your fingertips. It literally tracks where you’re spending money and can help you create a budget too.
Another thing to consider is that most money goals are equivalent to life goals. An easy way to start the discussion is by talking to them about what kinds of life goals they see for their future. This opens the door to accountability and helps them understand that you’re genuinely interested in their goals and want to be a part of their success too.
You can help keep momentum by checking in to see how they’re tracking to their goals (not every day or every week, but once a month seems fair). This also gives your child a sense of responsibility and ownership. Something that they could feel like they’re lacking at this stage in their life.
You Keep Bailing Them Out Of Financial Distress
It’s hard not to help a loved one when they’re dealing with financial distress, let alone your own child. But how much is too much? When do you stop giving in and how can you help them get ahead? The answer isn’t clear but here’s what we suggest.
As the ancient Chinese proverb goes, you can give someone a fish, and you feed them for a day. If you teach someone to fish, you’ll feed them for a lifetime. If you’re bailing your 20-something-year-old out of debt, there’s likely another action you’ll need to take. And that’s teaching them the basics about credit cards and loans.
Start by talking about how credit works: compound interest, credit scores and the impacts of these. It’s a difficult conversation to have but you could help them make the necessary steps towards a healthier financial future.
You’re Way Too Accessible
It’s common that children tend to think that their parents' success translates to their own success. Depending on your views, this could feel like a fair assumption. But it also poses a lot of risks for your child. If your 20-something-year-old feel entitled to the things you earned, they could hold you responsible if they don’t end up having those same things.
Talk to your child about your own goals to help them understand that you also deserve the life you want. You earned the life you have by sacrificing time, effort and money. And that means that it’s okay to indulge in the finer slices of cake that life has to offer—guilt-free.
So, help your child get ahead by understanding their situation, but also understanding your own.
Create a welcoming a space to talk about life goals together so you can help motivate your 20-something year old to take control of their finances. Setting a budget and using online tools and resources are a great start.
But most importantly, you’ll need to set precedents too. And that begins with defining accountability, having larger discussions about the impacts of debt and talking to them about your own goals.