11/19/2012 7:15 PM ET|
Is it time to cut off your kids?
As more young adults live with Mom and Dad, parents may wonder how to prepare kids for financial independence.
You or someone you know probably has an adult child living at home, according to a "60 Minutes" and Vanity Fair poll. More than half, 54%, of today's parents say there's no set time when kids should stop living at home -- not when they graduate from college or get a full-time job, or even when they get married. More and more college-age and post-college-age children are taking advantage of this and living at home.
Forty percent of American adults ages 18 to 39 either live at home or have done so recently, according to a poll for the National Endowment for Financial Education. That's alarming, as the findings exclude students and include "kids" up to the age of 39. The same survey found that these adult children are having a financial impact on their parents, too. Of the surveyed parents with adult children living at home, 26% have taken on debt to support their kids, and 7% have delayed retirement.
This begs the question for the 46% of parents who think kids should live their own lives at some point: When should you cut the financial cord?
Children should begin earning for themselves at an early age by contributing to household chores and taking on extra tasks to earn cash, says family finance expert Ellie Kay. Make sure children understand their responsibilities, and have their contributions increase as they get older.
"If you set a precedent that you will just hand over cash every time kids ask, the problem can exacerbate as adult financial responsibilities and mistakes take over," she says.
David Bakke, a personal finance reporter, says his parents had a rule: If he wanted to buy something, he had to earn the money to pay for it. Today, he says it's "one of the best things my parents did for me."
This rule also applied to Andrew Schrage, one of Bakke's reporting colleagues. Schrage's parents made him save up for a car as a teen, "although they did sell me one of their old cars at a significantly reduced rate and (paid) for my auto insurance into my late teens," he says.
Kay agrees that if a teen wants to drive, the child should pay for his or her own car. She also thinks teens should be required to pay for a portion of their auto insurance so they appreciate what it costs.
The entitlement generation
An attitude of entitlement is especially prevalent in kids who are not used to earning their own way and have no idea what items cost, Kay says.
"As parents, we owe our children food, clothing, health care and shelter, not fun with friends, designer clothing, cellphones with data plans, a car or a party-school college experience," Kay says. "If kids want those things, they need to earn it for themselves. Otherwise, they feel entitled instead of appreciative."
She emphasizes that when kids work for things, they value them more. And that includes a college education.
Students who choose to work to contribute a moderate amount toward their college expenses often do better academically, according to the College Board. Two-thirds of full-time undergraduate college students receive some type of financial aid. About 61% of that aid is in the form of grants, scholarships, federal work-study, tax credits and deductions that do not have to be repaid. The remaining 39% of financial aid dollars consists of loans.
Start cutting the cord on college financing early. Kay says teenagers should know a portion of their time must be spent working toward money for college. This includes attaining a high grade-point average and excelling in extracurricular activities. In addition, researching local, affordable schools; applying for state scholarships, grants and work-study programs; or joining the military are all ways to reduce college costs and earn money for tuition and living expenses, Kay says.
She adds that the goal is to raise adults who take responsibility, because the period between ages 18 and 22 is when a parent should start ending most forms of financial support.
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When I was 18 many moons ago.Parents didn't pay for their kids to go to college.Kids worked part time went to community college and thru scolarships.My parents saved for their retirement.
If ya put your kids thru school are they going to pay for your retirement?Yeah right your dreaming.
My parents had money, but they didn't live that way. They didn't drive expensive cars, my mother had no jewelry, they didn't take but perhaps two vacations that I remember, and they were only to visit friends. When we got our first job as teenagers, we were told that anything from now on was up to us to buy (clothes,shoes, outings with friends, etc) My sister and I had our college paid for, ( I didn't want to go but they made me). We lived at home until we were both married. We worked and paid rent. We did 99% of the housework, I helped dad in the yard. We were expected to contribute and we did. My parents gave us a work ethic and it shows now. Thanks, Mom and Dad for that!
They have paid for some of their expenses since they were 16 years old, extra things like a new skateboard, snowboard etc. They pay for their own season passes to snowboard and for college books and entertainment. We pay tuition because we feel that it is our job to prepare them as best we can to be happy, productive members of society.
Having said all that, it is my and my husbands families culture that children live at home if they need or want to. In other countries children live at home until marriage and I believe it contributes to strong family bonds. It is well known that the "family unit" in our culture declined (sorry, not sure if declined is the word I really want to use, can't think of anything else at the moment).
The old saying "the family that eats together stays together" has some validity. I don't think it has be applied only to eating together.
This really hits home with me. I purchased 2 rental homes about 12 years ago and let my 28-year-old son and 22-year-old daughter move in to them. The houses are free and clear. They have never paid one dime in rent and I am also paying their health insurance and even my son’s utilities. He is 40 now and the daughter is 34.
My daughter had a child and the father took off and left her. She remarried and the new “step dad” moved in and they were divorced a year later. He never paid a dime in rent even though he makes 80 k a year as an electrician. He has since moved out and has been living with his parents for over a year and is paying them ….you guessed it…. No rent or utilities.
The daughter started dating some other real slime and we sued and won a custody battle for our Granddaughter. She is now living with us and is 10 years old.
They have abused the privilege and moved some real slime in with them who have also mooched off of me by living in the house for free. There have been drugs and booze parties and we continue to pay. Son has spent about 4 years off and on in the County Jail and that is the only time I save money!
The daughter has a minimum wage job and the son claims he can’t work and is filing for disability. He has not worked for 4 years and we are even paying for his prescription drugs. To my credit, if there is any, I have refused to pay for any medical bills. I even mowed his yard this summer because he complained he could not do it.
Don’t bother to call me nuts or a pushover because I will agree with you. The problem is the wife goes nuts every time I make noises about getting them out or making them pay. The marriage of the parents could end up in a divorce over the disagreement as to whether or not to continue to pay for the adult kids. It’s a catch 22.
I think many times the kids get a free ride because the husband and wife could end up in a divorce over the fights that occur over whether or not to pay the kids.
I am 63 and retired and the wife is 62 and retired.
When children are taught to call 911 first in the class, this makes parents to be off the control on their children. With no parent control, kids will continue burning their future for fun.
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