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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?

Start early

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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Credit concerns

"Giving teenagers access to your credit card sounds counterintuitive, but avoiding the topic is a horribly misguided approach to teaching kids how to use credit and achieve a good credit score," says John Ulzheimer, the president of consumer education at SmartCredit.com. "You have to assume they will use a credit card, so teach them how to use it sooner rather than later. Adding your older teen to your credit card account is the equivalent of driver's ed and a learner's permit when it comes to credit usage."

Ulzheimer and Kay agree you should never co-sign for loans or credit cards for your kids, no matter how old they are. "If you co-sign, they control the card or loan, but you have equal debt liability if an account defaults. It puts your own debt-to-income ratio and credit score at risk," says Ulzheimer.

Kay says, "The baby boomer trend is to bail out their adult kids repeatedly, which deteriorates parents' own wealth and retirement."

When to start cutting the cord

A "boomerang kid" is an adult child who returns to live at home again later in life. "When a boomerang fails to launch or refuses to leave home, you've got to cut that cord," says Kay. "Make it as uncomfortable as possible for that adult child to live at home. Instead of feathering the nest, add a few pine cones to make leaving the nest seem more attractive -- and then they will fly."

  • Start cutting the financial cord early. If your young child wants designer duds or a fancy gaming system, have him or her earn it by doing chores around the house and saving money from birthdays and events.
  • By age 16, expect your kid to work for you with chores or at a part-time job. He or she can use this money to pay for a cellphone bill, a portion of car insurance and gas on your car and as savings for his or her own car.
  • If kids are living at home at age 18 and older and are not in school, they should be paying rent -- barring a tragedy or extenuating circumstances. Try to make the situation temporary by increasing the rent every three months or so. A written, well-planned exit strategy is a good idea when a grown child asks to live at home.

When to stay connected a little while longer

  • If college students want their own credit card, keep them as an authorized user on your card while teaching sound credit principles until they turn 21. New credit card rules make it difficult for those younger than 21 to get their own credit cards without their own income or assets.
  • If your adult child needs help with health insurance, keep him or her on your plan as long as it's financially feasible for you. President Barack Obama's Patient Protection and Affordable Care Act allows children to remain covered under a parent's health insurance until age 26.

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