With so many young people eager to get into the property market but struggling to save enough for a decent deposit, there’s much to be said about staying at home for longer and being Packed to the Rafters as a way of eventually reaching their goal.
It’s clear the popularity of the program says a lot about how people not only relate to the characters, but also the predicament some of the Rafter children find themselves in while they opt to live with their parents so they can financially find their feet, whilst still retaining some level of independence – and dignity!
And it’s not a bad way for some aspiring home owners to get where they want to be – as long as mum and dad are OK with it and there are clear financial rules in place for both parties.
Of course the biggest hurdle for children who choose to remain living at home while they save for a home of their own is that they have to live by mum and dad’s rules while they’re there. But while this may be a hurdle for the children, it’s a perfect opportunity for parents to educate their children (if they haven’t already) about the need for everyone to pull their weight financially so the household bills can continue to be met.
So the first thing that needs to be agreed upon by the family is to decide what sort of payment should be made by the child who continues to live at home after they’ve gotten their first full time job.
And this can be the tipping point for many families.
Because whilst the parents want the child to understand that nothing in life is free, so its only fair to start contributing to the household expenses, the child often rationalises that it’s better to save as much of their income as they can in order to get their own place so they can get into the property market sooner.
But life doesn’t work that way. Because as they will eventually find out – everyone needs to pay their way.
Therefore the most effective long term compromise here is to agree on some sort of levy which can be comfortably paid by the child to offset some of mum and dad’s household expenses. It will also get the child used to budgeting for everyday living expenses before they buy their own house and develop their own strategies to financially fend for themselves.
The next thing for the child to do is set up a dedicated savings account (such as the Federal Government’s First Home Saver Account) which can then be linked to their employer’s pay system so a portion of their salary is automatically transferred into it every pay period.
Having actual savings as well as a regular savings pattern needs to be evident if a lender is going to take any borrower seriously, so it’s in a parent’s best interest to encourage their children to set up such an arrangement as soon as their child starts work – regardless of what their future plans are.
And finally, both parents and children need to understand each other’s boundaries – personal and otherwise.
For children still living under mum and dad’s roof, they need to respect that it’s their parent’s house and therefore their rules. And parents, well.. they need to understand that their children will make mistakes as they learn and that they may not toe your line every time.
Regardless of whatever battles you choose to fight together – what can be certain is when that end goal is eventually reached of owning your first home, the road traveled to get there will seem much less bumpy.
Tags: affordability, Budget, First Home Buyers, First Home Savers Account