When to give up the bank of Mum and Dad

Image by Carissa Rogers

With the economy going into recession, the past few years have seen young people relying on that interest-free, much-loved bank of Mum and Dad. After the property market crashed, many people were stuck when it came to buying their first home without any assistance.

But with the housing market showing signs of recovery and unemployment levels being reported as lower, when is the time to finally branch out on your own?

Spoilt rotten

If your parents are in a position to be able to help you out, it can be easy to think, 'why not take advantage?' If they are happy to give you hand-outs, why would you refuse them? There are still a huge amount of young couples relying on their parents to pay for their weddings, as well as coughing up the deposit for their first house. With salaries stalling in many industries, sometimes the offer of parental assistance is just too tempting to resist. Graduate jobs have seen a reduction in starting wages, often meaning people have to save for longer than ever before to raise the necessary cash to grow up. But this reliance on parents can mean that when young people finally take that step into the real world and branch out on their own, they are completely unprepared for dealing with everyday financial situations. Budgeting may not be something they've ever had to do and it can come as a shock when they realise how much things actually cost. This can lead to mounting debts and frequently turning back to parents for bailouts.

Work for everything

Some families are not in a position to offer any financial aid but this can often be more beneficial in the long run. Children who've had to work for everything they have often understand the value of money from an earlier age and may find budgeting and saving considerably easier. Of course, this doesn't apply to everyone and some people are just savvier with money than others. Opening a savings account or speaking to somebody at the bank or building society can help people to figure out how much, if anything, they can put aside each month. Working out all the outgoings compared to what you have coming in each month will make it easier to see what you will be left with in spare funds. Having a plan of what you want to save for means you can work out a realistic time frame and put money aside each month.

Forward planning

Some parents may be happy to fund their children long into adulthood as a form of forward planning. If they do not need the money for something in particular, why not give it to their children? Many parents leave everything to their children when they pass away so helping them out financially while they're still alive is one way of giving their children an early inheritance. Parents can also teach their children about money management when they are younger and encourage them to open savings accounts in a local building society for example. Learning budgeting skills from a young age gives children an understanding of the value of money that they won't get by having things bought for them by adults all the time. Ultimately, children shouldn't have to give up the bank of Mum and Dad until they really need to. If they are lucky enough to have that extra benefit, and their parents are happy for them to have it, there's no real harm in carrying on, as long as the children are able to stand on their own two feet when necessary. About the Author: This Cambridge Building Society article was written by UK-finance writer and blogger Lauren Sutton.

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