Youth drain parents of savings

By Staff Writer

An American survey has found that 62% of young adults between the age of 19 and 22 rely on their parents for financial assistance. Jason Garner, management consultant at acsis, said South Africa is probably mirroring this trend, as it was recently reported that the number of unemployed youth (age 15 to 24 years) in South Africa jumped by 126,000 (9.9%) in the first quarter of 2012 from the fourth quarter to 1.393 million. He advised that parents build this additional expense into financial plans going forward, on top of the other necessities they save towards, such as retirement and tertiary education savings.

 

Garner added that in South Africa, many young adults are not finding jobs after high school or university in order to assist themselves financially, thus relying on their parents for longer than originally planned. As youth unemployment will continue to be an issue for years to come, it is necessary for consumers to start planning for this additional expense earlier in life, to protect themselves financially. 

 

“If not, many will find themselves spending their hard earned retirement savings trying to support themselves along with children who they did not plan to support after a certain time period. As we are currently experiencing a low return environment, financial plans should be regularly reviewed to ensure that this significant additional expense is correctly planned for.”

 

Garner warned that parents could find themselves in financial trouble if they don’t cater for the possibility that children will be leaving the nest later in life. “Parents who did not plan to support children for longer than originally expected are more than likely to find themselves in major financial trouble if the situation is not properly planned for. Not many families can withstand a long-term drain on assets that probably already took a blow during the market meltdown of a few years ago.” 

 

He warned that adults who still live at home and are neither working nor studying are a worldwide phenomenon, and can affect economies negatively if it continues.  “In the United States the situation where parents are left struggling to support children who return home laden with student loan debt and facing few job prospects has been labelled ‘full nest syndrome’.

 

“This situation highlights the need for financial planning that is appropriate for the type of financial climate consumers are currently experiencing. A planner plays a vital role in helping clients analyse their current situation and determining how to articulate their life and financial goals appropriately. Consumers need to ensure that financial plans are correctly created for their individual needs at a specific point in their lives. For instance, parents that anticipate children will not be moving out soon or will be returning after college or university need to plan and save accordingly,” concludes Garner.

Recent Articles

Featured Applying for a home loan? Consider the repo rate

When you apply for a home loan, one of your top priorities should be to secure a low interest rate. In order to achieve this, you need to be familiar with the repo rate. We find out more about this.

Effective financial planning as a single parent

As a single mom or dad, it can be challenging to keep up with the ever-increasing expenses of raising a child. We have a look at the importance of setting up a budget as a single parent.

How your credit score impacts your insurance – and vice versa

Since insurance is paid in advance, it may seem unrelated to your credit score. However, these two are in fact linked to one another. We find out why insurers look at your credit score.

Should you share finances with your cohabiting partner?

When you and your partner decide to move in together, you need to work out whether it would be better to share your finances, or to continue to operate separately.

Deals

Get a FREE flight ticket with Hotel Sky

Price: From R5,200
When: Until 31 January 2022
Where: Johannesburg and Cape Town

Voucher for 2 special at Bakwena Day Spa

Price: From R1,798
When: Until 31 January 2022
Where: Centurion, Hartbeespoort and Stellenbosch

Spier Hotel Summer Special

Price: Available on request
When: Until 31 March 2022
Where: Stellenbosch


Latest Guide

Guide to debt rehabilitation solutions