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Jax Daily Record Thursday, Jun. 2, 201112:00 PM EST

6 of 10 parents support adult children


by Karen Brune Mathis

Managing Editor

To a large degree, parents are financially supporting their adult children who are out of school.

An online poll commissioned by the National Endowment for Financial Education and found that 59 percent of parents are providing, or have provided, financial support for their adult children who are no longer in school.

A survey report said it explored how the current economic and job landscape is presenting a bigger challenge than expected for those who should be leaving the nest.

It found that 65 percent of adult children, from ages 18-39, who are not in school believe that their generation’s financial pressures are tougher than those facing previous generations.

Some parents agree. About one in three, 32 percent, said their generation had it easier than their adult children.

Further, 43 percent of parents providing financial support say they are doing so because they are “legitimately concerned” with their son or daughter’s well-being.

Also, 37 percent say they struggled in the past and don’t want to see their children similarly struggle.

“Parents are continuing their (financial) involvement longer than we expected,” said Ted Beck, president and CEO of the Denver-based organization in a news release.

He said that while the general sentiment is that financial pressures are high, parents should have a “serious talk” about expectations with their adult children.

According to the survey, parents are providing support in many ways:

• 50 percent are providing housing.

• 48 percent are helping with living expenses.

• 41 percent are aiding with transportation costs.

• 35 percent are providing insurance coverage.

• 29 percent are handing out spending money.

• 28 percent are helping with medical bills.

Among the adult children who are living at home, the survey found that 42 percent are contributing in nonfinancial ways, such as cooking, cleaning or child care, and 75 percent are financially contributing to the household with:

• 52 percent chipping in toward groceries and other food expenses.

• 34 percent helping with utilities.

• 31 percent putting gas in the family car.

• 29 percent helping with the rent or mortgage.

In what Beck said was a disturbing trend, parents are making sacrifices to help their adult children that they may not be able to comfortably make.

“We all want to ensure the best for our children. But if you are taking on extra debt or delaying retirement to help your adult child, you could be making a mistake and putting your own financial future in jeopardy,” said Beck.

According to the survey, 30 percent of parents responded that they have given up privacy since their adult children moved back home; 26 percent have taken on additional debt; 13 percent have delayed a life event, such as buying a home or taking a vacation; and 7 percent have delayed retirement.

The online survey was conducted May 10-12 among 683 adults ages 18-39 who are not students, and 391 parents of children ages 18-39 who are not students.

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Financially helping your adult child
The National Endowment for Financial Education suggests that if you are providing financial support for your adult child, some ground rules could make a difference.

• Talk so you will understand where your child is coming from. This will allow you to make an informed decision about whether you want to or can help him or her through a rough spot.

• Examine your own financial situation. If helping your child means you won’t be saving as much as you had hoped for your retirement or another important financial goal, you might reconsider.

• Establish a plan. The more seriously you take the situation, the more likely your child will. Draw up a written contract, and if you have a financial planner, find out what he or she would charge to work with your son or daughter.

• If you are loaning money outright, considering charging a small interest rate. This will encourage your child to repay the money in a timely manner and avoid borrowing as much as possible in the future.

• Set a time limit. Before giving your child a loan or allowing him or her to move back into your house, work together to decide exactly how long the situation will last.

• If you are giving your child a stipend each month, decide a date by which he or she will be financially independent.

• If you are loaning money, establish how much time your child has to repay it.

• If your child is moving back into the house, decide on a move-out date, just as would be stipulated in an apartment lease.

• If you agree to pay off your child’s credit-card debt, insist this is a one-time offer. If your child believes you will bail out him or her every time a bill can’t be paid, your child might never learn the risks and rewards associated with credit.

• Require an adult child who lives at home to help out with household responsibilities, financial and otherwise. You could charge a small amount of rent to help pay for household expenses. This tactic will encourage your child to save and remind him or her that the situation is temporary.

• If you cannot provide financial support, find another way to help. Offer a used family car that you no longer need. Draw on your professional connections to help him or her secure a higher-paying job. Watch grandchildren or pets so that your child can actively apply or interview for a new job and/or work extra shifts

• Live by the rules. Stick to the financial agreement and guidelines you and your child have established. This way, neither party can claim that the other isn’t holding up its end of the deal.

• Lead by example. One of the best ways to help your adult child live a healthy financial lifestyle is by demonstrating the behavior you would like emulated.

• Turn the situation into a life lesson. Once your son or daughter has met his or her financial goal, whether it’s repaying debt, finding a job or saving enough to live independently, celebrate this accomplishment. Then, make sure everyone involved learned from the situation.

Source: National Endowment for Financial Education

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