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TD Canada Trust partners with family relationship expert Gary Direnfeld with advice on applying tough financial love

TORONTO, May 7, 2013 /CNW/ - Many parents feel the need to give financial support to their grown children well into adulthood, from welcoming them back home after graduation day to helping them pay off their credit card. In fact, one-in-five Boomers (19%) admit they would consider putting their own security and financial future at risk to help support their adult children.

New research from TD Canada Trust shows the majority of Boomer parents have financially supported their adult children in some capacity. They have let them live at home rent free (43%), subsidized big purchases like a new car or computer (29%), contributed to monthly bills like groceries and rent (23%), and helped pay off their credit card or other debt (20%).

John Tracy, a senior vice president at TD Canada Trust, warns too much financial support - coupled with mortgage payments, retirement savings, and even elder care - could put a serious strain on Boomers' finances.

"Today's high youth unemployment, increasing post-secondary education costs and high property prices means many young people are more likely to rely financially on their parents well into adulthood," said Tracy. "As a parent, it's natural to want to help when children struggle with finances, but it's important this support does not compromise your own financial stability and retirement savings goals."

Family relationship expert and social worker Gary Direnfeld said a little tough love is essential to avoid a cycle of dependency and to maintain healthy family dynamics.

"Some parents worry too much about being liked by their kids, but as parents it's our job to teach our children financial independence so they learn how to cope with frustration, overcome adversity and appreciate the value of a dollar," Direnfeld said. "Even if money is not an issue, setting boundaries and knowing when to say 'no' from the time kids are young will help develop responsible young people, so we don't end up with a generation of dependent adults."

Additional advice from Tracy and Direnfeld on how boomer parents can practice tough love when it comes to family finances:

1. Have open and honest conversations

"Don't assume that everyone is on the same page; be clear on what you are and are not willing to support financially," said Tracy. For example, if grown children move back home, will they be responsible for paying rent or covering any household expenses, and what are the implications if downsizing is a future consideration?

"If the support strains your finances, share those concerns and explain the basis for your decision to cut back or say 'no,'" Direnfeld said. "The big challenge is withstanding the initial backlash and staying firm. Depending on the circumstances, some families find it useful to seek support from a third party, like a financial advisor or social worker."

2. Pay yourself first

Tracy says it is vital to prioritize retirement savings in peak earning years, so parents should refer to their financial plan before lending a hand to their children. "Millennials have decades left in the workforce to earn money, but Boomers likely do not," said Tracy. "If parents can't support themselves in retirement, then they risk shifting the financial strain onto their children instead."

To make saving simpler, set up regular preauthorized transfers of a set amount into an RSP, and ideally, a TFSA for emergencies. Saving automatically can help parents resist the temptation to splurge on their children instead of saving for the future."

3. Budget and plan for generosity

Fifty-four percent of parents estimate that even though their adult children are not attending school, they provide between $100 and $300 each month in financial support. The research also found 18% of parents have helped their children with the down payment on their first home. Regardless of how much support parents offer, Tracy says it's crucial to budget for it.

"Before helping with a down payment, speak with a financial planner and mortgage expert in tandem to understand the financial implications and, more importantly, to find out if all parties can truly afford to do it," Tracy said. "If your child has saved a sizable down payment and proven they are ready to take on the responsibility of a mortgage, topping up their down payment could save them thousands of dollars in the long run if you have the means."

4. Be a role model and teach financial literacy

Tracy and Direnfeld agree that teaching children about money from a very young age can help prevent a cycle of dependency. But, for parents who feel the strain of supporting adult children today, they recommend firm but measured action. "Parents should gradually shift their role from financial aid to financial coach, and help their kids establish a plan to get their expenses under control and pay down debts," said Tracy.

Direnfeld adds that grown children need to understand independence means owning their own consequences, and he says parents should let their children learn this lesson through experience rather than making a decision to support them out of guilt. "Being a role model is only as good as the example you set; let your children see that you hold them accountable for their own decisions," said Direnfeld.

About the TD Canada Trust Tough Financial Love Poll

TD Bank Group commissioned Environics Research Group ( to conduct an online custom survey of 2,155 Canadian parents who have adult children not attending school. Responses were collected between January 10 and 25, 2013.

About TD Canada Trust

TD Canada Trust offers personal and business banking to more than 11.5 million customers. We provide a wide range of products and services from chequing and savings accounts, to credit cards, mortgages and business banking, to credit protection and travel medical insurance, as well as advice on managing everyday finances. TD Canada Trust makes banking comfortable with award-winning service and convenience through 24/7 mobile, internet, telephone and ATM banking, as well as in over 1,100 branches, with convenient hours to serve customers better. For more information, please visit: TD Canada Trust is the Canadian retail bank of TD Bank Group, the sixth largest bank in North America.

SOURCE: TD Canada Trust

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