The Parental Lifeboat
Have you turned to your parents for financial help, or are moving back home?
If so, you’re not alone. In fact, since 1970 the number of adults between 25-34 living in their parent’s home has skyrocketed to more than 50%–that’s roughly 39 million. While this may be good for those moving back, it isn’t so great for those being descended upon. According to a University of Michigan study, parents are spending 13% more on their offspring. The financial strain for these particular parents means they may have to postpone retirement, take on more debt, or raid their retirement funds already depleted by the recession.
While economic pressures (inability for grads to find employment, suffocating student debt) are contributing to the dependence on parental help, the burden on parents is furthered by an offspring’s irresponsible personal spending. Studies show too many college students and grads have amassed an average personal credit card debt of at least $5,000. When they can’t come up with payments, often parents are asked to bail them out–or worse. Parents who have co-signed on car loans (which have gone unpaid) find out the hard way their son or daughter has defaulted and their own credit is now compromised. Some experts believe Baby Boomer parents have been a little to helpful when it comes to money, bailing out sons and daughters on a regular basis. This practice doesn’t teach self-sufficiency and maturity. But that’s only part of the problem.
Experts advocate that young adults take responsibility for their own finances. What can students and grads do to keep personal spending to a minimum and not burden parents with their financial issues? First, if your parents have co-signed on anything for you, always make those payments on time. If for any reason you can’t, tell them immediately and come to a resolution on how that bill will get paid. Letting payments go will ruin your credit and your parents credit rather quickly. Next, have an honest discussion about what’s going on–is your spending out of control? If it is, fess up and begin to make responsible changes. Remember, if you don’t make those changes now, your financial future won’t be a bright one. Beyond that, the burden you might place on parents is one they don’t need right now–too many are worried sick about getting pink slips, and losing their home or car. Start to do what you can now to lessen any financial burden on yourself and your parents, don’t let them continue to keep you afloat.