The Bank of Mom and Dad: Canadians are still relying on parents to pay the bills
Rent, utilities, groceries, even Netflix⌠everything seems so expensive these days.
For young Canadians trying to become financially independent, moving out and paying your own bills can feel less like a rite of passage and more like a luxury, especially when a one-bedroom rental apartment can eat up a huge chunk of your paycheque.
According to a new report from RBC, plenty of parents are still helping their adult kids keep up with the bills â even those well into their 30s.
The bank surveyed 1,000 Canadian parents with children aged 18 to 40 and found that nearly one in three (32 per cent) say their children are not yet financially independent.
That financial dependence doesn’t necessarily end once their children reach their 20s. RBC says 21 per cent of parents are still supporting their kids aged 30 to 34, as are 19 per cent of parents with kids aged 35 to 40.
In other words, âThe Bank of Mom and Dad” is staying open a little longer.
A little over half (51 per cent) of parents surveyed admit they’ve provided financial help to an adult child in the past year, handing over an average of $6,151. Nearly one in five parents say they’ve provided an even bigger amount, ranging between $10,000 and $19,999.
More parents are pitching in for the basics, too. The report states that among parents who financially support their adult children:
- 56 per cent help pay for groceries
- 43 per cent have helped cover an unexpected or emergency expense
- 24 per cent help pay rent
- 21 per cent contribute to utilities
- 12 per cent help with credit card or debt repayments
Some Canadians are certainly lucky to have parents to bail them out when money gets tight â a privilege that, unfortunately, isnât afforded to everyone. So, why are parents continuing to foot the bill?
A total of 51 per cent say that itâs simply “what parents do.” Another 35 per cent say the cost of living is simply too high for their children to manage on their own. Meanwhile, 25 per cent say they want to give their kids opportunities they didn’t have growing up.
Of course, helping your children doesn’t mean parents should put their own finances on the back burner.
RBC says itâs important for parents to put on their own âfinancial oxygen maskâ and prioritize things like essential expenses, emergency savings, high-interest debt repayment and retirement before deciding what they can sustainably give their kids.
The bank also encourages parents to “diagnose before they fix.” If an adult child is struggling to pay for groceries, rent, or other necessities, they should first determine if the issue is due to overspending, income, or affordability, since each problem requires a different solution.
The Bank of Mom and Dad may not charge interest, but that doesnât mean it should be drained dry.
To read the full report, visit RBCâs website.