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Financial Planning

Good News for Gen Y

I'm optimistic. I have no doubt that eventually my two fledgling adults will ive as well as or better than I.

Judging from the press releases clogging my e-mail in-box, there seems to be an upsurge in financial angst among twentysomethings -- or at least an upsurge in media coverage of youthful angst. Plagued by a tight job market, high housing prices and student-loan and credit-card debt, young people will have a tough time getting ahead -- or so the story goes.

As a parent of two children in their twenties, I'm more optimistic. I have no doubt that eventually my two fledgling adults will live as well as or better than I do. Today's young people have more opportunities (and information) than ever before -- plus, in many cases, the luxury of trying out several directions before choosing a career path.

Tight job market? Hardly. An unemployment rate that's falling toward 4% -- historically regarded as full employment -- can only help young job seekers.

High housing prices? They haven't prevented a growing cohort of young adults from buying a home. The number of first-time buyers younger than 25 jumped from about 11% earlier in the decade to 14% last year.


Student-loan debt? Yes, it's been increasing. But there's no need to feel "forced" to pay more than $45,000 per year to attend "the illustrious institution of your choice," as one high school student recently wrote to me. You can choose a first-rate education for a fraction of the price at dozens of state colleges (see the 100 best values in public colleges).

Credit-card debt? Young people should avoid plastic until they can manage cash. If they wait until they have the maturity -- and the income -- to pay off their balances, they'll be able to use credit as a useful tool rather than as a crutch.

Safety net. Of course, not every new grad is going to pull down $40,000 a year. But those kids who volunteer, go back to school or take entry-level jobs don't need to go into debt to support themselves. They could, for example, follow the time-honored tradition of taking a second job. And they might avoid the bright lights and pricey lofts of Manhattan and move to a place that's hip but affordable -- such as one of the cities profiled in 50 Smart Places to Live.

Or, yes, they could come home and spend a year or two with Mom and Dad and save up to go out on their own. Full disclosure: My son, who graduated last year, has been living at home while he attends school part-time and coaches the crew team at his old high school -- a job that gives him a lot of satisfaction but not much remuneration.


Most parents are happy to welcome kids back to the nest temporarily -- as long as they come with a plan for what they'd like to do, a timetable for doing it and a willingness to contribute to the household, in rent or services (my basically broke son makes a mean spaghetti sauce). How much financial support should you give adult children? Enough to provide a safety net but not a featherbed.

So, for instance, it's probably smart to pay for health insurance, if necessary, because you could end up on the hook if something happened to your child. And it may make sense to invest in a condo and let your child live there in exchange for rent or caretaker services. But I draw the line at paying for graduate school or depleting your retirement resources.

No worries. Most kids who come home are champing at the bit to leave. Next year my son and a former college roommate plan on getting an apartment, for which he'll need a second job. "No worries," he assures us, when he's occasionally forced to borrow money to tide him over till his next irregular paycheck. "I'm keeping a tab, and I'm good for it." I have no doubt that he is.