When should you stop paying for your adult kids’ expenses?

Wondering when to cut the money cord? Effie Zahos reveals there may be situations when it can make financial sense to keep covering your kids’ expenses.

When should parents stop paying their adult kids’ bills? It’s an interesting question and for the record Kosta (that’s my adorable 16-year-old son) the answer is not “never”.

As a parent, you want to help your kids as much as possible. I know that every time I visit my daughter in Canberra my wallet gets a good workout.

In fact, it’s become an ongoing joke. Whenever I take her out to dinner or we go shopping for groceries I jump in and say “Don’t worry, I’ve got this!”, knowing full well she is unlikely to offer to pick up the tab. And, of course, I get it. As a uni student on a tight budget there is no way she can afford to wine and dine me every time I pay her a visit nor could she fill up a trolley with luxuries such as dry shampoo. Mind you, even I get bill shock at the supermarket these days.

→ Related: 9 apps that can help you save more than $5,200 a year on groceries

When it may make sense to keep paying for your adult children

This brings me back to the question of when should you stop paying your children’s bills? Is it when they get their first job? When they move out of home? When they turn 18? There’s no straightforward answer as each family’s circumstances are different but here are some instances when it can make financial sense to keep your kids ‘on the books’ regardless of their age. (Okay, I might draw the line when they hit 50.) I recently offered some of these examples on Today.

Health insurance

One example is health insurance. Even if my daughter earned a solid income it wouldn’t make financial sense for her to come off our family policy.

Canstar’s analysis of average health insurance premiums found that there was only a $61 difference when you compared a couple’s SilverPlus policy with a family policy. In other words, it would only cost parents an extra $61 a year to keep their child on their policy as opposed to the child forking out for their own cover – which could potentially set them back thousands of dollars.

Average annual health insurance premiums: family vs couple

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Source: www.canstar.com.au – 13/05/2022. The Australian Government Private Health Insurance Rebate Base Tier for under 65s, of 24.608% has been applied to premiums. National average premiums based on state averages weighted by state population of insured persons. All calculations exclude OSHC, Visitor and Corporate policies. Average premiums based on policies on Canstar’s database that have a premium available for both the couple and family profile.

It’s worth noting that even though the federal government has enabled health funds to let dependants stay on family memberships for longer – up from 24 years to 31 – the change isn’t compulsory so not many insurers have acted on it yet.

To date, it’s been mainly the smaller insurers that have upped the age limits. For example rt health, a division of HCF, has announced it will extend cover for family dependants up to the age of 31. HCF says its policy is still under review. As it stands now, the dependant age for HCF is 25 for full-time students.

Medibank told Canstar it’s upping the dependant age to 31 but not until the end of the year. The other majors, including bupa, nib and HBF, said they are all reviewing their age limits.

Mobile phone plans

Bundling your phone plans is another good example of when it can pay to cover your kids’ bills. If everyone can get a discount then it’s a no-brainer. Canstar crunched the numbers on an Aldi ‘Family Plan’ versus a single mobile plan. In this case, not only do you get the same amount of data but it works out to be a saving of $5 a month each. If your child is earning an income and is in a position to pay then why not get them to cough up their share?

ALDI Mobile Family vs Single Mobile Plan

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Source: www.canstar.com.au – 16/05/2022.

Streaming services

Another area where it can make sense to keep your kids ‘on the books’ is with streaming services. Let’s take a look at the numbers. Hypothetically, if you moved from two screens down to one on Netflix and three screens down to one on Stan you could save $120 a year. But if your child subscribed to the basic plans themselves it would cost them $251.88 a year ($20.99 x 12). The ideal situation is to get your child to cover the lost savings of $120. They’d still be better off by about $132 a year.

Cost of additional screens on Netflix and Stan

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Source: www.canstar.com.au – 16/05/2022.

One tip, though, is to be sure to read the fine print about sharing subscription services. Netflix, for example, says only people who live with you can use your account so if your child has moved out this isn’t going to be an option.

Remember every dollar that goes towards your adult kids’ bills is one less dollar towards your retirement.

If you can get a better deal by staying on a family plan do so but if your child is working then I’d suggest getting them to contribute their portion. It may seem harsh but, believe me, there’s nothing cute about a 40-year-old who still needs mum or dad to pay their bills.

Here’s to knowing when to cut the money cord.

Effie

Cover image source: Lopolo/Shutterstock.com