Seventy-four percent of parents help pay for their adult children’s living expenses, according to a new CreditCards.com and BankRate survey. The cellphone bill is the most common expense parents help pay (39%), and other top expenses they assist with include transportation (e.g. car repairs, gas) (36%), rent (24%) and utilities (21%). In total, 52% of parents said they helped their children pay down their student loan debt.
I want to highlight that a quarter of parents of adult children help them pay their rent. Said differently, a quarter of young adults cannot afford to live on their own without financial support from their families. And these are the ones that do not live at home to begin with.
We want better for our children after they graduate from college.
The best way to empower our kids to be healthy, happy, and financially independent adults is to ensure that they: (1) pick a field that offers recent grads well-paying entry level jobs and (2) attend colleges that do not result in crushing student loan burdens that prevent them from being able to obtain core tenants of the American Dream like living independently, buying a home, or starting a family.
The holidays are a great time to discuss the financial implications of studying certain subjects or at certain schools. Our children must understand the likely outcomes for graduates for fields with limited career demand. Your child may love Picasso and Matisse, but does she know what Art History students do after they graduate? There are only so many job openings at the Louvre each year.
Students must also understand what it means to have $250,000 of non-dischargeable student loans with thousand dollar monthly loan payments. The dream may be an elite private college, but if the price tag is not realistic based on savings, merit aid, and financial aid, discuss if other, more affordable, colleges provide similar opportunities and experiences.
Build the foundation for long term success by discussing your child’s plans for the future and how college fits with those goals. You can empower your child to create the life that she envisions—both professionally and personally. There can be no greater gift this year, and the dividends it will pay in the future extend far beyond rent.