Rising costs for everything from housing to groceries has many parents thinking about their children鈥檚 financial future. Many of Senior Financial Advisor Raj Hundal鈥檚 members can afford to give at least a little to children and grandchildren, but she says it鈥檚 important to have a plan first.

鈥淯nderstandably, many of my clients are emotionally attached. Their instinct is to give as much as they can to help pay for their child鈥檚 house or their grandchild鈥檚 education. Sometimes this emotional attachment can blind them to what they can actually afford. We need to look at their short-term cashflow needs and long-term goals, to help determine how they can best help,鈥� says Hundal, who works at .

Contribute to your spouse鈥檚 RRSP or child鈥檚 RRSP/TFSA

If you鈥檝e maxed out your own contribution room and have more savings in a non-registered account, consider topping up your loved ones鈥� registered accounts. Set up a spousal RRSP if your partner earns less than you, or pass it on to your children. 鈥淛ust remember that you have no control over that money once it鈥檚 been gifted. Have a conversation to explain your wishes for the gift 鈥� if it鈥檚 for a down payment or education, explain that. But if your child uses it differently, that鈥檚 their choice,鈥� Hundal says.

Pass your inheritance on to the next generation

If your own retirement planning is on track and you鈥檝e just received an inheritance from your parents鈥� estate, consider gifting it to your children for their first home, or setting up RESPs for the grandchildren. 鈥淵ou can also open a special account to set that money aside for later. If it鈥檚 a registered account, you can name the beneficiary, which means it won鈥檛 need probate from court after you pass away.鈥�

Co-sign considerations

Co-signing for your child鈥檚 student loan, line of credit or first home mortgage can help them significantly, but don鈥檛 ignore the risk to your personal finances. 鈥淭he co-signer is fully liable to pay off the complete loan, and the loan will show on your credit report. Talk to an advisor so you understand the consequences 鈥� even for something as simple as a joint account,鈥� Hundal says.

Communicate

Talk to your children about your financial plans 鈥� don鈥檛 leave surprises in your will that may cause stress or delays for your loved ones. 鈥淥ngoing communication with your wealth advisor is also important. The more your advisor understands about your life and goals, the better they鈥檒l be able to help.鈥�

Every person is different, and that means every financial plan needs to be unique. A solid financial plan that considers your future income and projected spending can help you decide if you can afford to make your desired gift without impacting your desired lifestyle.