It feels like something that will never happen to us but trust us, it does, and it happens with a bang.
Sure, the kids might seem to be completely young and innocent for now, but time flies. In a few years, university will beckon, and this can prove to be an utter shock to the system for most parents.
The purpose of today’s post isn’t to take a look at mental tactics that can help you cope with this change in your life. Unfortunately, it’s something that all parents will go through, and like anything you will grow more used to the new situation at home.
Instead, it’s about the financial impact. A lot of people believe that this is the point where expenditure starts to drop to the levels it was pre-parenthood. As we all know, kids are expensive but don’t immediately fall into the trap of thinking that your expenses follow them out of the door.
Let’s now take a look at some of the ways you can financially plan for when the kids do leave home.
Consider all of your new expenses
As we have already alluded to, one of the most common traps that a lot of parents fall into is thinking that all of their expenses have now been eradicated. In other words, whether it is via a student loan or paid work, the kids are starting to stand on their own two feet.
This is true to an extent (although not quite, as we will move onto later) but let’s not forget that you are going to have other costs.
As morbid as it might seem, you are part of the ageing process. You might have to pay for elderly care in the future, while even funeral plans need to be taken into account.
Then, when you also consider the fact that you will probably stop working at some point in the future and potentially rely on a lower income through your pension, it suddenly becomes clear that your finances might not be changing at all.
Will you be part of the bank of mum and dad group?
If you follow the news, you will know all about the bank of mum and dad. It is becoming one of the largest (unofficial) mortgage lenders in the country, although on the plus side it’s completely up to you if you want to be part of this lending circle.
In short, more and more parents are providing their children with a deposit to fund the purchase of their own home. Again, it’s completely optional, but it’s something else that you might need to be aware of as the outlay can naturally span into the tens of thousands.
It can be a vicious circle (remember the grandkids)
Following on from the previous point, let’s talk about the vicious-circle factor. In short, as soon as the kids flee the nest, you might have the grandkids around the corner very soon. While your financial commitments are by no means as strong, many grandparents still provide and this is another one of those “unexpected” expenses that you never thought would impact you.
Nb. Collaborative post.