How to kick the kids out of home
YOUNG adults are lingering in their family homes for longer than ever, putting pressure on parents and their own financial futures.
Kicking the kids out might seem callous, but there’s a growing movement to produce financially independent young adults – nicely illustrated by last month’s report of two New York parents taking legal action to evict their unemployed 30-year-old son.
Most parents won’t go that far, but they and their children can benefit from a few strategies.
Maxine Pagliasso has three adult children living at home – aged between 19 and 24 – and all are saving for their future and prepared to look beyond big cities to get a foothold in real estate.
“My husband and I had a plan: ‘24 – out the door’,” she said. “Our philosophy is they need to buy a property where they can afford.”
Daughter Shari, 24, is working multiple jobs and eyeing property in regional New South Wales.
Mrs Pagliasso said many young adults were savvy and knew what they wanted, but weren’t thinking far enough ahead. “If they get caught in the rental trap they may never get out,” she said.
“We talk about saving very regularly at home.”
Record low interest rates make building a deposit tricky, but new investment options can help. Fractional investing allows people to buy small pieces of a house to share in its capital growth.
Daniel Noble, CEO of fractional investing company CoVESTA that allows people to rent and co-own their homes, said the number of Australians aged under 40 who had never bought real estate had jumped 30 per cent in the past decade.
“Right now the average time to save a deposit nationally is about nine years, which is nuts,” he said.
“A lot of people say ‘why bother? Let’s go on a holiday’. Quite often young people don’t know where to start. Fractional investing allows them to dip their toe in the water.”
Lending or giving money can be tricky. “The Bank of Mum and Dad is the eighth-biggest bank in Australia and has the highest default rate,” Mr Noble said.
Planning for Prosperity adviser Bob Budreika said many young adults refused to listen to their parents, so a separate role model could be used to motivate – perhaps grandparents, older siblings or a successful family friend.
Goal setting is important. “If you don’t have an objective, it’s easy to meander through,” Mr
Budreika said.