Gillian* has gone from empty nest to full house.
The 48-year-old is a full-time working mother of two young adults: one who is finishing a trade apprenticeship, and another who is just a year out of university. Both had moved out of the family home, but just before the holidays, a break-up forced her younger son to temporarily move back into his childhood bedroom. When the pandemic hit, a brief week-end visit from her eldest also turned into something more indefinite.
“When we were told to shelter in place, I think the kids figured that my place was as good as any,” laughs Gillian.
She admits that having them home has been nice. It reminds her of the good old days, with family dinners and playing video games together — times when Gillian felt needed. But it also reminds her of the noise, the bickering, the messy rooms and the dishes in the sink.
With both kids unemployed due to the economic shutdown, she has also returned to her role as the Bank of Mom. “Right now, I’m footing the bill for everything,” she says. “Car insurance, prescription medications, and gas money is all coming out of my wallet. There are assurances that they’ll pay me back, but realistically I doubt I’ll see a cent in the near future.”
In March of 2020, the unemployment rate rose by 2.2% to 7.8%, the highest level since October 2010, when the country was crawling out of a big recession. Among younger Canadians aged 15 to 24, 392,500 lost their jobs, the fastest decline across age groups.
“While government benefits have been made available, many young workers and students were left out of emergency financial measures during the early stages of this pandemic,” says Stephen Inskip, Regional Vice-President of Financial Planning for TD Wealth. “With rents at an all-time high in Canada’s urban centres, moving back home may have been the most obvious choice for young people who were facing uncertainty.”
Dr. Gina Di Giulio, Director of Mental Health at Medcan, a private health clinic in Toronto, adds that this can be a good opportunity to emotionally and financially support to your kids. But it can also be important to put boundaries in place, so that you don’t put yourself in a dire financial situation or end up picking up their socks and doing their laundry.
“Even though this is hopefully temporary, you may be contributing to creating a generation that is dependent on their parents,” warns Di Giulio, “robbing them of very important life skills that one needs to be a fully-functioning and successful member of society. These kids might have a much harder time leaving home and getting back on their feet if they’re not encouraged to become independent.”
So if your adult child has shown up at your door, boxes in tow, here are some considerations to keep your savings and sanity in check:
1. Set rules
Di Giulio warns that, just because you’ve lived with each other previously doesn’t mean the rules will be the same this time around. Coming home to live as an adult should come with different rules and expectations, and writing it all down can be helpful, including an tentative move-out date. Spell out financial obligations for your child — rent, groceries or the household bills they will be responsible for. “Contributing to the household expenses is a great way to establish a boundary, or paying ‘rent’ for the privilege of living back home, even at a rate that is significantly lower than living elsewhere,” Di Giulio says. “If they have no income currently, chores and other responsibilities should also be clearly delineated.”
2. Pay yourself first
It can be important to have discipline with your own savings plan so that you don’t sacrifice everything for your children. During this time, make sure your own financial plan is solid and, if you are able, that you’re continuing to save and contribute to RSPs, TFSAs and other savings and investment accounts, before handing over an allowance to your children for their discretionary spending. “It can still be vital to prioritize retirement savings if you are earning, and have a careful budget when you aren’t,” says Inskip. “So parents should think about that when considering support for their children.”
3. Budget for kindness
Rework your budget to factor in all your new extra monthly costs. Some are obvious, like additional groceries and utility expenses. But there may be some hidden costs to children moving home. Auto insurance, for example, may rise with another driver in the home. Who will be responsible for your child’s prescriptions or dental costs? Even if your children are living elsewhere, it can be hard to say no to a child in genuine need. It can be prudent to add a line in your budget for helping out the kids.
4. Help find relief resources
The government has put measures in place during this time to help Canadians with their expenses. Recently the Canadian Emergency Student Benefit (CESB) was announced for those currently or soon-to-be enrolled in a post-secondary institution, as well as those who are just graduating. The federal government has increased the HST/GST credit payment for those who are eligible, and have increased access to student loans and grants for the 2020-2021 school year. “Helping your adult child navigate those waters, and helping them apply for these benefits is an important skill,” says Inskip. “In addition, having them speak with a financial professional may help them to access loan and credit card payment deferrals if required.”
5. Model and preach financial literacy
Teaching financial literacy principles to your children at a young age may prevent a cycle of dependency later in life. “For parents who are caught in that cycle today, they’ll need to move from financial aid to financial coach,” says Inskip, “and help children get control of their finances so they can move towards greater independence.”
Right now, encouraging adult kids to save what they can and live on a budget may help set them up for success when the economy opens up.
Gillian says that while it’s difficult to help her kids launch and make future plans when things are so uncertain, she does plan to put some household rules in place going forward.
“This can be a good opportunity to show that you support them,” she says. “But it’s also a chance to show them what being an adult really looks like.”
*Name changed to protect subject’s privacy.
DISCLAIMER: The information contained herein has been provided by TD Wealth and is for information purposes only. The information has been drawn from sources believed to be reliable. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual's objectives and risk tolerance.
TD Wealth represents the products and services offered by TD Waterhouse Canada Inc., TD Waterhouse Private Investment Counsel Inc., TD Wealth Private Banking (offered by The Toronto-Dominion Bank) and TD Wealth Private Trust (offered by The Canada Trust Company).
All trademarks are the property of their respective owners.
® The TD logo and other trade-marks are the property of The Toronto-Dominion Bank.
MENTIONS JURIDIQUES : Les renseignements aux présentes ont été fournis par Gestion de patrimoine TD aux fins d’information seulement. Les renseignements proviennent de sources jugées fiables. Les graphiques et les tableaux sont utilisés à des fins d’illustration et ne reflètent pas des valeurs ou des rendements futurs. Ces renseignements ne fournissent pas de conseils financiers, juridiques, fiscaux ou de placement. Les stratégies fiscales, de placement ou de négociation devraient être étudiées en fonction des objectifs et de la tolérance au risque de chacun. Gestion de patrimoine TD représente les produits et services offerts par TD Waterhouse Canada Inc., Gestion privée TD Waterhouse Inc., Services bancaires privés, Gestion de patrimoine TD (offerts par La Banque Toronto-Dominion) et Services fiduciaires, Gestion de patrimoine TD (offerts par La Société Canada Trust). Toutes les marques de commerce appartiennent à leurs propriétaires respectifs.
ᴹᴰ Le logo TD et les autres marques de commerce sont la propriété de La Banque Toronto-Dominion.
免責聲明：本文內之陳述由道明財富 (TD Wealth) 提供，僅供資料說明之用。本文根據相信為可靠的資料匯編而成。圖表僅供解說之用，並不反映任何投資的未來 價值或未來回報。本文資料並不旨在提供財務、法律、稅務或投資建議，衡量個別投資、交易或稅務策略時，應考慮個別人士的目標和風險承受能力。道明財富、道明銀行 (The Toronto-Dominion Bank) 與其聯屬及相關實體對任何資料錯漏或導致的損失或傷害概不負責。道明財富是代表由道明宏達理財加拿大有限公司 (TD Waterhouse Canada Inc.)、道明宏達理財私人全權託管投資有限公司 (TD Waterhouse Private Investment Counsel Inc.) 以及透過道明銀行提供之道明財富 私人銀行 (TD Wealth Private Banking) 和透過加拿大信託公司 (The Canada Trust Company) 提供之道明財富私人信託 (TD Wealth Private Trust) 所提供的 產品與服務。TD Waterhouse Canada Inc. － Member of the Canadian Investor Protection Fund。
® 道明 (TD) 標誌和其他商標是道明銀行的產權。
免责声明：本文内之陈述由道明财富 (TD Wealth) 提供，仅供资料说明之用。本文根据相信为可靠的资料汇编而成。图表仅供解说之用，并不反映任何投资的未来 价值或未来回报。本文资料并不旨在提供财务、法律、税务或投资建议，衡量个别投资、交易或税务策略时，应考虑个别人士的目标和风险承受能力。道明财富、道明 银行 (The Toronto-Dominion Bank) 与其联属机构及相关实体对本文中任何资料错漏或导致的损失或伤害概不负责。道明财富是代表由道明宏达理财加拿大有限公司 (TD Waterhouse Canada Inc.)、道明宏达理财私人全权托管投资有限公司 (TD Waterhouse Private Investment Counsel Inc.)、以及透过道明银行提供之道明财富私人 银行 (TD Wealth Private Banking) 和透过加拿大信托公司 (The Canada Trust Company) 提供之道明财富私人信托 (TD Wealth Private Trust) 所提供的产品与 服务。TD Waterhouse Canada Inc. — Member of the Canadian Investor Protection Fund。
® 道明 (TD) 标志和其他商标是道明银行的产权。