Millennials say ‘thanks’ to the Bank of Mum and Dad
Cutting the psychological umbilical cord and gaining independence as a young adult is a vital rite of passage. But launching into the world, post-school or post-Uni, is one of the toughest things to do these days. Despite this, it is a little-known fact that 30% of Millennials decide to ‘go it alone’ instead of depending on the ‘Bank of Mum and Dad’; a really positive and surprising figure.
It is clear millennials are more money-wise than they are given credit for, and many are determined to be financially independent, making their way in the world without leaning on parents.
Growing Independence
Money is one of the last great taboos. People often feel uncomfortable talking about it directly, especially amongst family. It is essential to be clear with each other, and not to get drawn into agreements and situations about which both sides feel uncomfortable.
If you, as a parent, have money and want to share it with your adult children, it is a great way of helping them start out. However, young adults do need to forge their own path. If they choose not to take a parental loan, and to struggle upstream alone, it is important parents allow them to have that experience. After all, adulthood is about separation from the security of the parental home. Parents need to aid that process, whilst being neither over-controlling nor judgemental.
Tips to aid independence
Talk about money openly without using emotive or guilt tripping language. It’s important to be matter of fact when talking about finances;
Parents need to teach responsible spending and saving habits, and lead by example;
Children should be honest about any confusion they may have and mistakes they may have made – do not hide things or be afraid to ask questions;
Talk openly about financial matters at times of transition, such as divorce, leaving home, going to university, buying a car, getting married or cohabiting or moving back into the family home.
Related: How to defuse tension when you live with your folks
Borrowing from the bank of Mum and Dad
Given the tough economic climate we currently live in, it is not surprising that 45% of UK adults have had some necessary financial support from their parents. Everyone needs a helping hand from time to time, and is important that those who have received support don’t feel guilty for it. For young people it can be an important part of kick-starting adulthood and achieving certain milestones in modern life. Parents can provide an important psychological launchpad. But asking for help, or giving it for that matter, isn’t always simple.
Tips for Adult Children
Asking your parents for money is seldom easy. However, if you need to borrow from the Bank of Mum and Dad, there are some things that might help:
Be straight about any outstanding loans or debts you may have outside the family or within. It’s good to start from a clean slate;
Do your homework first and ask for a precise amount;
Put your case forward – it’s important to explain what you want and why. Have figures to hand, with clear costings;
Also, ask for a loan, rather than expect a gift. Agree a repayment schedule and a clear timescale;
Work out what you will do if you can’t/don’t make your repayments;
Keep to the discussion to the matter in hand. Don’t talk about what happened to any siblings or bring up past disagreements. Keep things clean.
Tips for Parents
You need to work out ahead of time how you feel about lending or giving money to your adult children. If you have a partner, it’s important you are aligned in what you’re prepared to do before you meet with your child/children (show a united front and don’t fight about it in front of them).
You might want to give money rather than lend it, and see it as an early inheritance. Or you may need the money back, for later life. If so, be clear about this before you start discussing things;
If there are other siblings, work out what is fair and equal for all, and communicate it clearly;
If you offer a loan, or make a gift, be clear about your expectations. Nothing is worse than a foggy agreement – it can lead to rifts, misunderstandings and bad feelings;
If it is a loan, agree a clear timescale. Don’t be squeamish about writing things down, getting things straight;
Don’t bring in any unfinished business or other past arguments, keep to the task in hand;
Listen well – if your adult child is putting a proposal to you, give them time to explain and also take time to think about it. Don’t dismiss it, or agree too quickly; it’s important to take time to think.
Of course, each family is different, and each child/parent relationship is unique. However, being able to talk about money is, in itself a ‘rite of passage’. If it works well, families can mould the next generation of happy, healthy individuals, who in turn will have the knowledge to best support their own families as they forge their futures.
