My Daughter is 25, Underemployed, and Lives at Home. How Do I Help Her Without Sacrificing My Savings?
Here's how to help your child while setting healthy boundaries.
Question: My daughter is fresh out of college and is struggling to find full-time work. We want to help her out with some bills, but are also concerned that prolonged underemployment could sap our savings. How do we help without sacrificing our nest egg?
Answer: Getting jobs out of college can be difficult at any time, but right now, it's extremely hard to do thanks to a weaker job market. To demonstrate, the federal government has lost 355,000 jobs since October of 2024, according to the Bureau of Labor Statistics.
If your child works but doesn't have a full-time job, then it's likely they're turning to you to help cover some of their living expenses, even if they are home. As this is a stressful time for both you and them, the important thing is to establish clear communication and boundaries while providing ample emotional support. We'll also cover how to help your kids financially while maintaining a healthy savings balance.
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The Gen Z underemployment crisis and why it might not go away
Getting your foot in the door of your career used to be about who you knew. While that is still the case, the job market is much different thanks to artificial intelligence automation. MIT's Project Iceberg, a labor-simulation tool measuring AI's impact on the labor market, found that AI can replace up to 11.7% of the US workforce.
The good news is that, in many cases, companies will use AI to complement their operations rather than replace entire workforces, according to Goldman Sachs Research. But it also creates a scenario where, if companies can do more with less, this will be a continual problem for younger workers.
So, how bad is it? The Federal Reserve Bank of New York found that 42.5% of recent graduates are unemployed, with unemployment at 5.6% — the highest since 2020. Therefore, if your child is struggling to find full-time work, they're far from alone, as many households are facing the same issues. Here's how you can help.
Start by having the money talks
"I see this all the time. Parents want to help, but get stuck helping too much." Christopher Briscoe, director of financial planning at Girard Advisory Services LLC, told Kiplinger. While you don't want to get in the trap of helping too much, how do you balance financially supporting your child without sacrificing savings?
This is where having money talks come into play. Start by listening to them, understanding their job frustrations and providing emotional support, as this can be a very stressful time for them. By that same token, "you can financially support them and put guardrails up to protect your nest egg," added Briscoe. To demonstrate, you could help them with their car payment, provided they apply to x jobs per week.
The key is to set the table of expectations as early as you can. Help your child understand how much money you can help them with, any expectations you have in return and when that aid will run out. "Think of it like college, I'll continue to pay for your tuition to a higher cost school if the grades are good," Chris Maudlin, Senior Wealth Advisor at AlphaCore Wealth Advisory, said to Kiplinger. "But if grades slip, then I'll pay, but the school might need to change."
Setting your child up for financial success
If you want to help your children financially, you should review the financial impacts before offering any promises.
Maudlin recommended, "Update financial planning by running scenario analysis to see how much and how long you can help. This can help you see whether you'll remain on course or need to take on more employment to handle the added costs. Or, whether the added costs are not budget-feasible."
The goal through this stressful process is to build financial transparency and trust with your child. By being honest about your financial situation, where you can help and for how long, you're showing them you care about their situation, so it keeps resentment at bay.
Briscoe also recommends using this time to help your child develop sound financial behaviors through proper planning. "Having a third party (advisor) who helps them with budgeting, planning, saving money and more, can help them hit the ground running when they secure full-time employment."
The checklist for staying on the right track
Here's a checklist to help your child without growing broke:
- Start by listening to their situation and offering emotional support
- Get a clear picture of their financial needs and shortfalls
- Meet with your financial advisor to run scenarios to see how much you can help
- Set clear expectations around how much support you’ll provide and how long it will last
- Establish accountability, such as applying to a set number of jobs each week or attending networking events
- Encourage them to build strong financial habits, whether through budgeting tools or guidance from a financial advisor
- Have regular talks, where they can come to you and rant about the job market, struggles with savings or other issues — this not only gives them the emotional support they need, it strengthens your relationship
Ultimately, almost half of new graduates are underemployed, placing some of that financial pressure on parents. By using this checklist and establishing ongoing communication with your child, you can set the stage for how much you can help them, for how long and what you expect in return.
By properly planning, you can bring peace to an otherwise stressful situation. And you build a stronger bond, where you can impart more financial wisdom onto your child, and vice versa, as they develop their career.
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