OPINION: We’ve been treated to a run of news stories about young people who’ve bought homes in their 20s, most with the help of their parents.
I like to see people get ahead, and I congratulate these young people, especially on their good fortune to be born to parents wealthy enough to help them.
These stories must make painful reading for less fortunate young people, and for parents unable to help their offspring into homes.
It seems on top of everything traditionally expected of parents, the pressure is on for them to help their young ones avoid a lifetime rental serfdom in the city of their birth.
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Here are the four messages parents in high house-price cities might take from these articles on young home-buyers.
Two are all achievable, one a stretch, and the other all-but impossible. I rate each one on a one-10 “do-ability” scale.
SELF CONTROL: Science shows children with self-control grow into wealthier adults. Parents, it is your job to instil self-control in your young ones. You also need to avoid raising a lily-livered narcissist who believes they are owed something by life. As young people who can’t afford homes are finding, the rest of the country doesn’t feel it owes them an affordable home. Raising unspoilt children is eminently doable, so I’ll say 10/10.
EDUCATION: I’ve met people who bankrupted themselves to buy, or rent in the “right” school zone, or who spent their retirement savings capacity on private schooling. The message is clear though: Children must succeed in education as in our merciless economy the least-skilled work for peanuts on insecure contracts. To have any chance of owning a home, children must be helped by their parents to achieve, whether to become a skilled tradie, or higher education-trained professional. Takes time, and a lot of effort. I’ll say 8/10.
KEEP THE STUDENT DEBT DOWN: We dangle massive loans in front of 17 year-olds and expect them to make rational decisions. It’s like we “grown-ups” all think we were models of financial rectitude at 17! The result is over 100,000 loans in default. Calling the borrowers traitors, idiots, or bludgers isn’t helping. Parents, it is imperative your children are ready to make the student loan decision. By 17, they must be imbued with the financial facts of life. Student loans must be kept small. That means studying from home, so you need to raise children you can bear to be around, and who can stand living with you. Optimistically, I’m going for 6/10.
AN EQUITY GIFT: And now the biggie. Parents, you may have thought it was tough enough to save the vast sums needed for your own retirement. Well, you now need, it seems, $50,000-$100,000 to help each of your children into a home. For many new parents the chance of that is 0/10. This is an absurd pressure for young parents to feel.
At least if parents manage the first three, the children will be in a position to make their way in the world when/if housing sanity returns, or they ditch their home town for somewhere more affordable.
GOLDEN RULES * Raise children with self-control * Teach them how money works * Help them find their education success