MONEY-SMART KIDS


Lending Kids a Financial Hand

Janet Bodnar

Getting their financial footing can be tough for young adults when first starting out. It's OK for parents to offer their support -- but how much is appropriate?



A few weeks ago I predicted a bright financial future for today's college graduates, who I'm sure will eventually live as well as or better than their parents.

Of course, despite a strong job market, not every new grad is going to pull down $40,000 a year. So this week I'd like to continue my valedictory with some advice on what young adults can do to get off on the right foot financially -- and how far parents should extend a helping hand.

As I've said before, a credit card can be a useful tool. But young people who take entry-level jobs, spend time volunteering or go back to school don't need to go into debt to support themselves.

They could, for example, follow the time-honored tradition of taking a second job. Or avoid the pricey lofts of Manhattan and move to a place that's hip but affordable -- such as one of the cities profiled in Kiplinger's 50 Smart Places to Live.

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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). Learn more about working out the details of a move back home.

Each family will have to decide how much parental support is appropriate. I'd recommend 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. But I personally draw the line at paying for graduate school or depleting your retirement resources.

My son and a former college roommate are talking about getting an apartment next year, and for that 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.




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