Should I give my adult child funds for a home down payment?

As parents, we want to do everything we can to help our kids. One possible way to do that is to help them by giving them funds to purchase a home.

But the question whether to do that or not depends on two things. One, can you afford to give them funds? Two, will it actually help them?

As to the first question….can you afford it….that all depends upon how much you are giving, and whether that affects any of your financial plans or your financial freedom or retirement plan. If it negatively affects your plans, generally you should not do so, it is beyond your duty as a parent to significantly damage your life plans so that your child can own a home. You are older than your child, and as a result your child has much more time than you to save and invest.

For example, if you are 65 years old, about to retire, have determined that you have just enough funds to retire next year, and you would need to give half of your retirement funds to your child to enable them to buy a house, making it so you won’t be able to retire until you’re 80…the answer would clearly be a no. If you are 55, have tons of savings, and giving your child $20,000 won’t affect any of your plans, then it’s clearly something to consider.

As to the second question…will it actually help them? This gets down to whether it actually makes sense for your child to buy a house. Are they mature? Are they financially savvy? Are they responsible? Is the home itself a good investment? Can they afford the payments? If the answers to those questions are yes, then it’s clearly something to consider. If it’s going to enable irresponsibility, or you believe that they can’t afford the payments, or they will buy a lousy home in a lousy area with lousy prospects, then it will be clearly a no.