Giving your kids a hand up

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For those planning to give their adult children significant financial help, there are a number of options available. To help make the right choice, parents should start with a family discussion.

Talking about the relevant aspects of an investment or strategy and documenting the result can be very useful to refer to in the future to jog memories that often become clouded over time.

Family discussions can also ascertain the view of each family member; it is possible that the children feel that the money will be best spent securing the retirement well-being of their parents.

For parents wanting to give children a financial gift that they will immediately appreciate, what they usually value most is cash with no strings attached. However, this may be influenced by whether the children have difficulties managing their behaviour or overcoming desire to spend the money immediately.

Another option is to pay off a child’s student loans so they can begin their working life debt-free. However, even though paying a student loan upfront in the past attracted a significant discount, this will no longer be the case from January next year.

Setting aside a lump sum gift to help with a deposit for a home can also provide a boost to an adult child’s financial position. Home ownership does not necessarily guarantee financial wellbeing, but it can provide a level of stability that makes managing life, a career and cash flow significantly easier. Parents should remember that care must be taken to buy a good-quality property and not overpay for it.

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