- Instill financial responsibility in your young adult children by requiring them to move out and handle their bills on their own as soon as possible after college graduation.
- While they're still in school, help them build credit with secured and, later, unsecured credit cards.
- Tough love means ruling out a financial "Plan B" to fall back on.
It's official: Apparently, you can go home again.
A recent TD Ameritrade survey found that 50% of "young millennials" plan to move back home with their parents after college. The survey polled 1,027 members of Generation Z (which the survey defines as ages 15-21), 1,026 millennials (which the survey defines as ages 22-28) and 1,001 parents.
This issue is actually very personal for me. My daughter Olivia recently graduated college and my two other children are at home closely following in her footsteps, so I made a strategic decision. I needed to kick Olivia out of the house and get her living on her own as soon as possible.
Do you think I am a bad parent? Does this make me a monster?
Or, am I taking the right steps, which more parents should follow, meaning I'm making my children responsible by facing the real world? I believe it's key to make your kids understand their own finances no matter what the struggles are for survival.
First things first. How many of you believe that, if you hand anyone money long enough, they will eventually cry "uncle" and stop asking for more? Let's all be honest with our answers.
The longer you let your child live at home, not only is it going to be harder to get them out on their own but chances are they will be asking for more handouts down the road.
This is why every parent needs to take the proper steps to getting their child out of the house and on their own.
When Olivia graduated college, my wife, Genna, and I gave her specific deadlines to get a full-time job and definitive timelines to find an apartment. Ultimately, it is up to your child whether they decide to find a roommate and whether they start their career with their dream job or just a job that will pay the bills. The point is that parents have to be decisive that the "safety net" of living at home is coming to an end, even if you choose to subsidize their housing for a small period of time.
Kicking your kid out of the house doesn't necessarily mean that you won't offer some initial help, but it does mean that they will be responsible for personally paying all of their housing bills. And as parents we can help there, as well, by showing our kids how to establish credit.
Many parents make the mistake of not helping their child build up credit during college, which can cause problems down the road if they want to rent an apartment, buy a car or get their own credit card. You should at least start your child out with a secured credit card in college and then graduate them to an unsecured card, so you can help them build their credit score.
More importantly, be clear when you move your child out of the house about who is responsible for what bills. With my daughter, I agreed to pay for her auto insurance and mobile phone bills for one year, but all of the other bills were her responsibility. After the year is up, she will take over those remaining bills and then essentially be off the "family payroll" for good.
I am betting that many of you who have become financially successful achieved that status because you worked hard and took responsibility early in life.
This means that if you didn't work your tail off, you wouldn't have enough money to cover rent or get groceries, so you did everything you could to make sure you could pay your bills. So why not instill those same values to your kids?
If you tell your kids "don't worry about things if it doesn't work out, as you can always come home" then you can be certain that they will never really get out and stand on their own two feet.
Of course, all of us want to help our children. However, letting them know there is always a "Plan B" will never really help them find their own way.
If you, like me, have multiple children at home, one thing you can be sure of is that they are all watching every move you make and they are all keeping close score.
So, if you give your first child a new car, then the rest of the kids will expect that, as well. If you let them live at home for two years, then you can expect that the others will assume they can live at home for two years, as well. If you give them a head start gift of $5,000 … you get the idea.
So, it's about tough love. It's about setting expectations and it's key that you as the parent do your job to help your children start their own adult lives. It's OK to let them experience the challenges of struggle. Through struggle is where most great success is born.
I cannot say that I didn't get in an argument or two, or three, with everyone in the house. But I love my kids more than life itself. Sometimes, we have to make the difficult decision and know it's the right one.
Make those tough calls. Unless you want those grown-up kids living home after college, you, too, should follow my advice about kicking your kids out of the house.
— By Ted Jenkin, co-founder and CEO of oXYGen Financial.