At a certain point in their lives, your child may decide to set off into the world and lead a life on their own, and you’ll want to provide them with the help they’ll need to make this miraculous leap.
Data shows that 22% of all people under the age of 37 who got their own home and started living in it have received a gift from family members, whereas 6% actually used a loan from family and friends to help purchase their first home.
However, even if you’re not able to give your child the money for a down payment on a house, you can provide them with incredible advice on how they should approach buying a home one day.
With proper leadership and motivation, you could teach your children to navigate the housing market on their own one day, and if you’re truly willing to help them, offer them financial assistance to the best of your ability.
Buying the home for them
Usually, whether or not you buy a home for your kid can depend on the situation you’re in, although there are definitely certain pros and cons to actually doing your children such a huge favor.
Before you jump in headfirst, maybe it’s best to speak to a financial advisor who could guide you through the process and help you understand the impact it would have on your own financial health.
Compared to the previous generations, millennials and genZ certainly have their work cut out for them when it comes to making a name for themselves, so there’s definitely a reason to offer a helping hand.
However, it’s important to gauge how much help you’re willing to offer, and sometimes, buying an entire home may end up being excessive.
Things to consider
It’s long since been established that going into a business with family members is probably one of the worst decisions you can make, and the same rule applies to loans, co-signing, or even giving something away as a gift.
Without proper communication, almost every deal can go south, leaving all of the parties involved with a sour taste in their mouths, and this can lead to entire relationships within the family being ruined over some paper with a currency value attached to it.
Regardless of how important money may be, family always takes priority, and you’ll be doing yourself and everyone else a favor if you choose not to go through with a deal that could potentially damage family bonds.
At times, a child could feel overindebted to a parent if they’ve helped them out with purchasing a home, and this risks adding extra stress to the relationship.
On the other hand, you shouldn’t let a family member pressure you into giving any amount of money away if it’s more than what you can afford.
The same thing goes for your children, and if you helping them could ruin your financial security, it may not be the greatest option.
Don’t think with your heart
As difficult as it may sound, it may be for the best to not let your emotions get the best of you when making these decisions, as it’s the only way to stay reasonable at times like this.
Your child is your own flesh and blood, and it’s completely natural for you to want them to have everything they could ever need, but you must also think about yourself.
Oftentimes, borrowing or gifting money away to a family member, including your child, can come with numerous tax implications, and if your life is stressful enough as it is, you should look to avoid adding even more into the mix.
If you’re having a hard time figuring out a game plan for how you’re going to help your child with their future endeavors, contact a financial or a family advisor to help you work out the fine details and teach you how to handle any similar situations that may arise in the future.
Some of the most difficult decisions regarding money are made when the parties involved are family or friends, and considering how much more than just money is on the line, it’s perfectly reasonable to think of it this way.
You want the best for your loved ones but you also want to live a happy and carefree life one day, meaning that you shouldn’t put others’ happiness in front of your own, or at least, not as much as you probably do.
Our children are the future of this country, and it’s our duty to introduce them to the way finances work from a young age, preparing them for what they may encounter when they’ve grown up and lived life on their own.
If you can, offer help to your child when they’re buying a home, as they’ll probably need it, but remember to stay within your means.