Friday, April 13, 2012

Saving for Retirment vs Financing Young Adult Children

If you find yourself in the quandry as to whether to continue to support your adult children you may find it interesting to note that a recent study conducted by Pew Research Center indicates that only 54% of Americans aged 18 to 24 have a full time job.  This is the lowest level registered since the government began collecting data in 1948.   Kevin McKinney, the author of the book, Make Your Kid a Millionaire  offered several suggestions in a recent article he posted on line.  I think these are worth noting.

Show them the (lack of money).  When parents learn that their benevolence today can mean a short and frugile retirement, saying no to paying for childrens wants and needs may become easier.

Cap College Costs.   High Schoolers are starry eyed about their "dream" school.  This week I sat through interviews with  High School Seniors applying for scholarships from a scholarship committtee I serve on.  We always ask where they plan to attend school, what they plan to study and how much will the school cost.  Our committtee is concerned at the lack of understanding of the long term consequences to a $40,000 a year tuition  in a "neat" sounding school.  It sounds like parents and kids are  clueless to what this "dream" school is going to cost or they haven't thought through what a quarter of a million dollars could do to financial security in later life. 

Set a cut off date.  If cutting off the cash flow seems unpalatable a suggestion is to decide upon a schedule of diminishing parental support.    This allows parents to provide an ultimate "teachable moment" regarding life's expenses and enable their adult children to start earning more, or balancing their needs and wants with their own income sources.

Blame the financial advisor.  If you know that you have to garner the courage to say "No" to your kids about their hands in your purse you could try this:  " Honey, we would love to help you out, but our financial advisor says its not a good idea right now."  or " Honey, we would love to help you out, but our financial goals and obligations don't provide for this expenditure right now."