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If you want to start a lively conversation this holiday season, ask parents what kind of financial help they provide to their Gen Z or millennial kids.

We’ve seen a progression in this type of help in the past 10 years, from covering cellphone bills to welcoming adult kids back home to live temporarily to providing money for home down payments. The next stage is helping adult kids afford to live in their homes.

The extent of this help was sketched out in a recent Carrick on Money newsletter survey of 1,116 parents who provided housing-related financial help to their twenty- and thirty-something children. Four in 10 parents who responded to the survey said they have helped with money for mortgages or other housing costs after their adult children bought a home.

The types of help provided offer a summary of the financial challenges faced by young homeowners today:

  • 26 per cent of parents who provided help to homeowning adult kids said the money went to maintenance or renovations
  • 22 per cent said the money went to paying down the balance owing on a mortgage at renewal, which is a way of keeping payments manageable despite higher interest rates
  • 16 per cent said the money went directly to cover mortgage payments
  • 11 per cent cited housing costs like property taxes, insurance

Among the parents who provided financial help, the dollar amounts were substantial. Roughly 20 per cent gave up to $10,000 and another 20 per cent gave between $10,000 and $25,000. Just more than 28 per cent gave $100,000 or more.

This help seems driven by widespread concern among parents about how their adult kids are doing financially. Almost 48 per cent of survey participants said they were concerned about the finances of an adult child, and close to 8 per cent described themselves as worried. Just more than 16 per cent thought their kids would have to sell their home without help.

A couple of weeks ago, Statistics Canada published a report showing that millennials whose parents were homeowners were twice as likely to own homes themselves. In recent years, parents have given their adult kids billions of dollars in financial help to buy homes, much of it supplied through equity parents have in their homes.

Now, there’s a new aspect to this housing-wealth feedback loop. Parents are helping their kids afford to live in their homes, not just buy them.

A sign of the affluence of parents helping their kids with housing-related costs: 60 per cent of survey participants said the money provided has not affected their own financial situation. About one-third said they were making compromises to afford the financial help and just 7.5 per cent said they were going into debt or using savings earmarked for other purposes. A question to store away for the future is how many parents are staying in the work force longer so they can afford to help their adult kids financially.

Parents who completed the survey had an opportunity to be specific about the financial help they provided their adults kids, and some of the answers were worth noting for what they say about parenting in the 2020s:

  • Gave my mother’s house from my inheritance
  • Carried the whole mortgage
  • Helped pay off a truck loan to qualify for a mortgage
  • Paid for a swimming pool
  • Paid off student loan
  • My daughter broke up with her partner and needed to pay his share of the house

The year ahead in personal finance should be brighter in that inflation and interest rates are expected to decline. But the cumulative effects of two years of high borrowing and living costs will be a factor, as will a large number of mortgages coming up for renewal at rates far higher than they were before.

Parents seem to understand this. Of the parents in the survey who haven’t helped their kids with money since they bought a home, just 40 per cent were confident they will not need to provide cash in the future.

Remember how raising kids was most expensive in the daycare years? The home buying years seem even more costly.

Sign up now to receive the free twice-weekly Carrick on Money newsletter and get access to a list of restaurants that answer the question of whether it’s possible to get decent value today when dining out. I asked readers to share their favourite affordable restaurants and received close to 150 restaurants in cities from Victoria to Clarenville, NL. The list will appear in the newsletter sent Thursday, Dec. 14.

Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.

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