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Consumer
Three of five adults under parents financial wings
DENVER (6/13/11)--Parents may be jeopardizing their own financial futures--taking on debt, cutting back saving, and delaying retirement--in return for opening their homes and wallets to boomerang adult children. As more offspring return to the nest when they’re no longer in school, parents are making significant sacrifices, some with long-term consequences. In a May 26 survey press release, the National Endowment for Financial Education (NEFE) reported that 59% of parents are helping their adult children financially: 50% provide housing, 48% contribute to living expenses, 41% help with transportation costs, 35% pay for insurance, 29% dole out spending money, and 28% pay medical bills. Harris Interactive conducted the online survey in May with 700 adult children and 400 parents. About one quarter (26%) of parents in the survey said they took on more debt themselves, 13% put off buying a house or taking a vacation, and 7% delayed their own retirement. Hardship also revealed itself in nonfinancial ways: 30% said they gave up privacy when the kids moved back in (International Business Times May 28). Before opening your home or wallet, consider these suggestions from NEFE to encourage financial independence (SmartAboutMoney.org):
* Have the money talk. Do this before writing a check or allowing adult children to move back in. A candid discussion helps you understand where they are coming from, what their debt level is, and whether you can--and want to--help them through this difficult period. * Review your own finances. If giving financial support keeps you from paying bills or delays your own retirement, consider other ways to help, such as offering leads for higher-paying jobs, donating a used vehicle you no longer need, or offering housing in exchange for help with chores and utility costs. * Set limits. This applies to timeframes as well as dollar amounts. Be specific, and put all agreements in writing. * Insist on one-time bailouts. If you pay off a loan or a credit card, make it clear that it’s a one-time occurrence. Otherwise they won’t learn how to use credit wisely in the future.
For more information, click on “Help Young Adults Move Out of Your Checkbook” in the Home & Family Finance Resource Center.
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