Baby Boomers and Their “Boomerang” Children
In recent years, many Baby Boomers have witnessed a growing trend: Their children are moving back home after graduating from college. I have many clients facing this right now. In part, the return of the “boomerang” children to the nest may be due to the high cost of living and a tight job market but sometimes there are other factors. Yet, parents who may have already spent a considerable amount of money on a child’s college education, as well as helping with other expenses, may be concerned about this turn of events.
After college, many young adults find themselves struggling to stand on their own feet financially. While this may be due to a highly competitive job market and high cost of housing in certain parts of the country, in other cases, spending habits that some younger adults have grown accustomed to rather than saving may be the culprit. Therefore, these individuals lack the necessary financial self-sufficiency to live on their own. Parents wonder if they are “enablers” or is it really different now for young people.
Here are 2 things to consider if you are a parent who wishes to see your children leave the nest and make it on their own:
- Rule number one. Adult children will be asked to contribute cash or services in lieu of rent to the household. At the same time, they will be expected to save a significant portion of their earnings for:
- a down payment on a home
- first month, last month, and a security deposit on a first apartment
- or start-up funding for a business
- Rule number two. Parents will help their children achieve financial self-sufficiency by helping them set goals and monitor their progress in meeting those goals. Consider offering an incentive plan to help this effort like offering a “savings match similar to a 401k match”. For example, for every dollar an adult child saves, you will contribute a certain percentage (the match).
For parents who consider themselves too emotionally involved to teach their adult children good spending and saving habits, a financial professional can perform a valuable function as a neutral, outside party in counseling young adults on how to loosen the “ties that bind” and pursue their financial and life goals.
Ready to discuss a financial plan for your child and you? Book a free consultation today!
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Important Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This article was prepared by Liberty Publishing, Inc.
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