Many adult children in South Africa live with their parents, for both cultural and financial reasons. This can suit both parties for a time – but how do you encourage your grown-up kids to become self-sufficient when this is clearly needed? Are there ways to nudge them towards financial independence, both for their sake, and for yours?
These are undoubtedly challenging times for young people. Many South Africans lack education, skills and basic means of support. Nearly two-thirds of young adults aged 15-24 years are unemployed, along with close to 43% of those aged 25-34 years.
The pandemic and state of disaster have also affected those who were on the first rung of independence. Traditional students’ jobs such as waitering, bar-keeping and babysitting fell away, while young people already in the job market faced retrenchment. Home became a welcoming haven and helped many to cope.
While keeping these difficulties in mind, how do you encourage your adult children to leave the family nest when the time comes? JustMoney.co.za gives some advice on how to put adult children on the path to financial independence.
1. Explain your motivation: Clarify that you are encouraging your kids to become self-sufficient because this will ultimately help them in life. You are doing so because you love and care for them.
2. Set a deadline: If your adult child has recently qualified, it helps to set a date for when you will no longer pay for their phone bill or provide a monthly allowance. This gives them time to prepare emotionally and practically and is preferable compared to abruptly cutting off their money supply.
3. Put their skills to work: If your child already has a skill, such as coding, they need to make an active effort to land a job, such as web development. They can build confidence and networks by contributing to open-source projects and joining hackathons, usually hosted by tech companies, to collaborate with other programmers over a short period on a project.
4. Teach budgeting: Involve your adult child in the household planning so that they are fully aware of what it costs to run a home. Young adults are often more technically adept than their parents. There are plenty of free budget calculators and other financial tools online.
5. Pass on basic savings and investment rules: Teach children about key concepts such as compounding, so that they understand how investment earnings are reinvested over time to generate more money. They can also create a mock investment account on an app.
- Read a JustMoney article about investing in unit trusts.
6. Cultivate positive values: Research shows that fostering an attitude of gratitude helps one to feel more positive and upbeat. Volunteering their time teaches children the benefits of helping other people, and reminds them of the many advantages they enjoy compared to those who are less fortunate.
7. Set goals: Encourage your children to think about their goals and what is important to them. What lifestyle do they aspire to and what practical steps do they need to take to get there? Discuss good role models and how these people have achieved their dreams.
- Find out more about saving for a deposit on a car.
8. Prepare for your own retirement: Actions speak louder than words. Discuss your own hopes for the future and how you are preparing for when you are no longer working. Ensure that you have an up-to-date will.
- Learn how inflation impacts retirement savings.
“A parent’s duty to support a child does not stop when they reach a particular age. They may be older than 18 years but still studying and gaining a qualification. A parent is obliged, for example, to pay maintenance until a child is self-sufficient, and we are all aware of the rising cost of living.” says Shafeeka Anthony, Marketing Manager of JustMoney.
“Nonetheless, becoming financially independent brings greater confidence and autonomy for the adult child. It also enables the parents to prepare for when they can no longer work. It is never too early to start educating a child about money matters and, in due course, setting boundaries. While it’s acceptable to help adult children occasionally or on a short-term basis, the bank of mom and dad cannot remain open forever.”