Should your Kids pay Board?

It is fast becoming a common trend for Kiwi kids to live at home with parents well after leaving high school and into their 20’s.

Whether it's to help take the financial strain off of University life, which is becoming increasingly expensive, or to help them save up for a home deposit, there is mounting debate on whether parents should charge “adult kids” board to live at home past high school and not make it a charitable situation.

So what are the benefits for charging board in this situation? Well, in addition to receiving that little bit extra to help pay bills and mortgage repayments, there are also some benefits for your kids… and your adult kids.

A good place to start when working out how much board to charge your kids is by looking at their take-home pay. If they don't earn very much, it's probably not fair to charge them market board (market board being $200 per week). Many people choose instead to charge their offspring a certain percentage of their take-home pay, which can be a good option if they're only working part-time.

Should you charge your child board? You might feel guilty about making them pay their way but remember paying board will teach them good lessons about budgeting and will encourage them to save and become independent. Research found that most adults living with their parents were helping the with bills or mortgage payments.

Why do parents charge their children board?

Charging board could be instrumental in helping your child build mental strength. Not charging board could be taxing on your income.

Helping your child out financially could be harmful to your nest egg. Many parents delay retirement or give up things so they can continue supporting their children beyond the age of 18. In general, parents should seek to have their children be financially independent between the ages of 18 to 22, That holds up with leaving school – whether it's high school, a trade program, or university.

HAVE WE GOT YOU THINKING?

Give us a call on (04) 563 6965 or email: dennis@taxman.co.nz or shawn@taxman.co.nz

Keep an eye out for July’s article!