Helping adult kids to become independent
SO much for the empty nest. Adult children are increasingly opting to keep living with parents, either returning home after college or just staying put after high school.
According to the Pew Research Center, for the first time in 130 years, living with an adult parent is the most common arrangement for adult children between the ages of 18 and 34.
Pew pegs declining marriage rates among young adults as the main driver of this trend.
Financial considerations contribute, too. If you’re juggling paying off student loans with an entry-level salary, staying in the family nest can be practical.
Even if you are a parent thrilled to have the company, laying down some financial rules is smart.
That kid is an adult who needs to take some responsibility for their future.
It’s up to you to create a framework for that:
1) Make sure student loans are being repaid.
Within a certain time frame, borrowers must start repaying their loans.
Failure to do so will hurt your child’s credit score and may make it hard for them to qualify for loans.
Maybe your kid isn’t buying a car or a home soon, but when the time comes, they will benefit from a strong credit score.
2) Insist on at least one credit card. One thing millennials get so right is their preference for using bank debit cards. But payments on credit cards are part of calculating credit scores; debit transactions aren’t. In your 20s, you want to work on building solid credit scores.
Opening one credit card account and setting up one or two small recurring payments (perhaps for Spotify or other streaming services) is smart.
Also, set up automatic bill payment from a bank checking account, so those small charges are paid off in full every month.
3) Charge rent.
Doesn’t matter if you don’t need the money.
If your kid is earning an income, charging monthly rent is how you help them build adulting muscles.
Doesn’t feel right? Take the money and set it aside in a savings account for them.
That can help with a rental security deposit, jump-start an emergency savings fund, or be used toward a home downpayment.
The best way to put this into action is to have your child set up an automatic monthly transfer to you from their bank account.
4) Have a healthcare plan.
Make sure they check out the cost of a healthcare policy, and have one in place.
5) No co-signing new-car loans.
Used cars are a fraction of the price of new cars.
Ideally, you want your kid to get a loan on his or her own, but if you do decide to step in, insist on a car loan for a used car only. — Rate.com/Tribune News Service