College graduates today have the odds stacked against them: They are loaded with debt, face an ever-increasing competitive job market and earn lower starting wages. It’s only natural for parents to want to step in and help them get on their feet to becoming financially stable.
In fact, they’re not alone. A study from the Pew Charitable Trusts found that nearly 61 percent of parents with adult children supported them financially in the past year.
While there isn’t a one-plan-fits-all, these simple tips can help you launch your kids out of the nest and into financial independence:
- Create a Plan: Consider drafting a written contract between you and your child. That way, both parties are contractually obligated to hold up their end of the deal.
- Set a Timeline: Whether you’re providing free or subsidized housing or offering to cover student loans, a timeline should be determined just as it would be on an apartment lease or loan repayment plan. Work together to decide exactly how long the situation will last so that both parties are involved in the decision-making process and approve of the plan.
- Give Them More Responsibility: If your children are living at home, require them to contribute to household items, such as groceries, utilities and more. Plus, it’s only fair for them to take their turn to clean, cook and do the laundry.
- Serve as a Resource: Once your children are off your payroll, it’s important to let them know that you will always be there as a “financial coach.” The stock market, 401(k)s and managing debt can be overwhelming. Even with all of the financial planning tools and services available, parents are still the number one source of information about money.
While supporting your adult children financially is fine from time to time, it should not keep you from your own financial endeavors and retirement goals. Be open with your child during this time, and discuss lessons learned from the experience. As always, a CERTIFIED FINANCIAL PLANNER™ professional is skilled in working with families to find a solution that will work for all parties involved and help your adult children on their way to financial independence.