Last year, right around college graduation time, the Philadelphia-based consulting firm Twenty Something
released this shocking statistic: 85 percent of college grads were moving home. That was nearly 20 percentage points higher than the last time I'd looked at the same measure, only four years earlier. For those of you who need proof that your young adult kids are trying to launch their real lives in the face of huge financial challenges, I'd say: Look no further. These kids have now officially entered "adultolescence" - a phrase coined by parenting experts for the frustrating phase that can span five years between the time education ends and adult life (as you know it) begins.
The question that follows is, of course, what do you do about that? How do you help your kids prepare so that when the economy turns for the better wherever you happen to live, they've got the best shot of making it on their own? And I'd say, you start with a conversation. A business conversation. Yes, you're still the Mom (or the Dad), but for the purposes of this talk I'd remove that hat and try to talk to your offspring as if he or she was the child of a friend who needed financial advice. This is important because, particularly if they're living at home (but even if they're not but still need your financial support) you want to emerge with a plan to transition them off your payroll in the future. Here are some questions/talking points to get you started.
What are your plans for after graduation? If you have a child finishing school in the next few years, don't wait until they order their cap and gown before talking about what life will likely look like. Depending on your child's major, it's probably been clear for a while if he or she will be able to earn enough to live independently after school - and what the job market looks like for kids with that specialty. You may suspect your child will move home. Do both of you a favor by broaching the subject. Once it's decided you can talk about specifics.
This is what I'll expect from you. . . You'll need to cover two things in this part of the talk, expected behavior (that's your call) and a household financial contribution. I fully believe there should be one, but just like you, your adult child likely has fixed costs that must be covered first. These include student loan payments, transportation expenses to and from work, food outside the house and a cell phone. Once they're satisfied, take a look at how much is left from your child's pay and consider asking the child to contribute for rent or cable/Internet or groceries. They need to do this because a) they need to start getting a taste of how much it will cost them to live independently and b) because you want them to have a financial incentive to strive for that apartment of their own. And if it's too nice and cushy (and free) under your roof, they won't have it. Note: I know some parents who can't bear the thought of charging their kids rent. If you're among them, one nice thing to do is to put the money they pay you in a separate account then give it back to them as an emergency cushion when they finally do leave home.
What do you think you could do to earn money until you find your dream job? Unfortunately, many of the 85 percent of adult kids moving home aren't underemployed - just not earning enough to make it on their own - they're unemployed. If your kid are in this group, it's important that you emphasize that even though they haven't found work Nirvana, they're still expected to contribute, even if it means working for minimum wage as a part-time nanny or golf caddy for a while. And they need to approach getting a job, as a job. Which means up, dressed and out of the house for the workday.
Let's talk about what I did wrong. Admitting your own mistakes to your adult children is one way to make these conversations feel less like lectures and more like you're really trying to help. When I have these talks with my kids, I'll be sure to address the massive credit card debt I accumulated shortly after getting out of school (half a year's salary), how I got rid of it (with a second, part-time job) and how I wish, wish, wish I had started saving earlier and had put away 10 percent of everything I earned routinely over the years.
What can I do to help? Finally, leave the door open. You want your kids to be able to come back to you both for counsel but also if they feel they've taken a financial misstep and need help - with either information or cash - digging out. Let them know you may not always be there with a checkbook and a pen. But you'll always be happy to listen.
Our college senior has a part time job, but even at full time, it doesn't pay a living wage (his boss is a famous mouse). We pay his rent now in school, and I know he doesn't want to move back home, but how long should parents subsidize a new college grad when school ends? Is a subsidy better than having them move back home?
With regard to Clay's predicament, my opinion would be to gradually wean him off the parental "dole" so to speak so that he eventually becomes self-sustaining. The Chuck E. Cheese job probably isn't meant to be a living wage, but rather a job for such people as high school students and college folks anyhow, so once he graduates, he'll probably be seeking higher-paying employment anyway.
I call it my quarter life crisis.
Just to chime in I'm guessing the "famous mouse" isn't Chuck E. Cheese, I think there is one a bit more famous.
Anon-I think the "famous mouse" in this situation is Mickey. :)
Clay—In regards to your questions, there really isn't a clear answer to which option is better. I think it really depends on each family's situation. Additionally, there are pros and cons to supporting a recent grad outside of the home and having them live with you. On the one side, living elsewhere could afford the grad some independence--financial and otherwise. While you may be paying for rent at an apartment, the grad can be responsible for other costs (food, car insurance, cell phone charges, etc.). This means that your child can still learn a thing or two about finances--enough even that he may find some ways to save up and cover his rent (or at least some of it). Conversely, living at home affords the grad the opportunity to save as much of his paycheck as possible. If the grad does end up living at home, you still have the option of charging rent, as mentioned by Jean in her post. I know of a few parents that have done this and found it to be very helpful. The rent may not be equal to that of an apartment but it can help lessen the financial burden on you, the parent. It can also help emotionally—you won’t feel as though you are giving your child a “free ride.” If your son does end up moving back home, the important thing is to set boundaries. If possible, give him a reasonable time limit to be out of the house and on his own and set an expectation of household responsibilities. The great thing is that you're talking about this before your college senior has graduated. Have a conversation with your son and see what his plans are after graduation. You may be surprised to hear that he already has a post-grad plan in place.
Note: I am a Wells Fargo employee.
If your adult children are single, ask them if they can find a roommate.
I would add this advice, especially in these hard economic times:
1) college is not a lifestyle, it is a training ground to give you half a chance to become employable
2)becoming an adult does not mean setting up a home that is as luxuriously appointed as your parents' home - live simply until you can afford to live high
3)'Dream' jobs are few and far between. It would be great to bounce out of bed every day, champing at the bit to get to work. The great majority of folks have something short of that. That is why they call it work.
4) Look in the mirror, ask yourself how you can add value for an employer, and fix the shortcomings.
5) Look before you leap - don't throw money at an expensive college unless you can afford the debt service afterward.
I admire the candor and forthright approach recommended in Jean's comments. We started this approach a little earlier when my daughter chose a college whose costs exceeded the budget we had committed, which was the same for each of 3 kids. In the interest of fairness, we thought she should pay the difference over above what we paid for her brothers. So we loaned her the money for extra tuition costs for four years. After she got graduated, she paid us back the entire amount, which we invested in a balanced mutual fund. When she got married, we gave her all the money she had paid back to us as a gift, which enabled her to have the downpayment on a house. She was thrilled, needless to say. All around, a good experience for kid and parents.
Note: a Wells Fargo employee