How Boomer Parents Can Stop Babying Their Millennials Financially
5 tips to help grown kids become independent and help you, too
For 2 ½ years after Nancy Archer’s eldest moved back to her parents’ Long Island, N.Y. home upon graduating from college in 2012, Archer and her husband covered all her costs (including cell phone and car insurance), except for personal expenses. Their daughter worked full-time during this period. None of them discussed a timeline for moving out.
But when Archer’s son graduated college last May with a job lined up, he returned home to study for CPA exams and save enough so he could afford to move out. He covered specified expenses, handled household chores and created a spreadsheet for living costs.
Archer realizes she and her husband should have created a similar, concrete plan for their daughter. “We really didn’t lay out proper expectations for finances,” she says. “We learned with my son, and when the last one graduates (in 2019), we’ll probably have a spreadsheet ready the second she moves back!”
Set Ground Rules for Everyone's Benefit
If your college grad is moving home, or already has, learn a valuable lesson from Archer and set ground rules to help him or her achieve financial independence. Otherwise, kids can get stuck —even become parasitic — and families risk breaking down.
“The goals for parenting adults are different from parenting children,” says Wendy Boorn, a Phoenix psychotherapist who works with parents and their Millennials and is author of I Thought I’d Be Done by Now. “Our job isn’t to take care of them. but to help them develop skills to take care of themselves.”
But that’s not easy when your child can’t find a job and can’t afford to live independently. According to a 2016 Pew Research study, in 2014, for the first time in more than 130 years, Millennials were more likely to be living in their parents home than with a spouse or partner in their own household. Key reasons include student loan debt, flat wages and high living costs.
Launching is hard. And moving back home is comfortable because boomer (and Gen X) parents are often more emotionally enmeshed than their own parents were.
Boorn says modern parents feel an enormous sense of responsibility for how their kids turn out. “They wind up with this load of guilt and unfounded responsibility. It’s an unfortunate and popular idea that a parent can’t have a good life if their child is struggling. That supports the bailing out and enabling,” she says.
One of the biggest challenges for today’s parents is how much to be involved in their adult children’s financial woes. Boorn says worried parents tend to give them money to alleviate their own anxiety.
But parents need to plan for retirement, and truth be told, are entitled to a vacation.
3 Questions Parents Should Answer
Ellie Kay, a Palmdale, Calif. finance expert and author of Lean Body, Fat Wallet, urges parents to consider these questions about their own wealth when deciding whether, or how, to support a Millennial:
Is your consumer debt paid off (credit cards, car payments and the like)? If not, if your kids come back to live at home, they should pay for their expenses.
Do you have a fully-funded 401(k) or other retirement plan? Ideally, you should be contributing the maximum your company matches on your 401(k) if you have one, and if not, it’s wise to contribute to an IRA annually. That may mean covering fewer of your adult child’s expenses.
How close are you to paying off your house? If you’re in your 50s or 60s and not within five to 10 years of doing so, you probably can’t afford to fund your kids.
Be honest with yourself and your child about what you can provide.
For everyone’s sake, financially and emotionally, families should put a clear plan in place before the Millennial moves home. Without a plan, it’s easy to spiral into judging and shaming.
“Parents can be intrusive,” Boorn says, admitting she speaks from experience (she has two children in their 40s and three grandchildren, two of them Millennials). “They try to control their children's behavior by nagging and lecturing, instead of giving kids the opportunity to forge their own plans for their futures.
It’s more helpful to offer the positive support of believing your Millennials are capable of meeting their goals and calmly presenting your reasonable terms for living arrangements.
You might initially be generous if your child is unemployed, but finding some kind of work should be part of your terms of endearment.
“Providing love, support and limited, stipulated financial resources is an empowering message to young adults,” Boorn says. In the words of a financial adviser she once talked with, “Be more kind, less generous.”
5 Ways to Help Kids Become Financially Independent
Both experts suggest drawing up and signing an agreement that clearly lays out expectations, protects all parties and helps parents step back. Here are five ways to do it:
1. Define goals for being home. Establishing goals helps your Millennial identify an exit strategy. That’s crucial for ensuring that the time back home won’t morph into a permanent arrangement.
Pay down student debt? Save for an apartment? Job hunt, locally or away? Identify a realistic time frame — six months or a year, perhaps — with the understanding that if the child doesn’t do her part, she’ll be moving out sooner.
“Feather the nest with rocks,” Kay says.
2. Decide how they’ll contribute. The amount and terms will be different for each family, but your child’s contributing is essential — whether it’s a rent stipend; designated expenses such as cell phone, health and car insurance and yard work, cooking or cleaning to offset parent-provided groceries and utilities.
Kay recommends kids pay for anything costing you extra — personal expenses always should be theirs. But analyze the end goal. If Millennials are paying so much that they’re not saving enough to afford leaving the nest, you might subsidize bills to expedite moving on sooner. That doesn’t mean financing a social life; living within their means is key.
3. Require they work. A job facilitates saving and provides purpose. Even if your Millennial can’t find a job in his or her field, it’s important to work at something. Archer’s daughter started out as a receptionist in a hair salon before eventually landing a position as an attorney recruiter.
4. Advocate financial education. Encourage Millennials to learn about credit cards, FICO scores and building credit history, as well as managing student loan debt. They should also learn how to budget for full living costs. “Teaching these skill sets helps them and helps you avoid the guilt of not paying for things,” Kay says.
Recommend the sites My Fab Finances, Young Finances, Broke Millennial and Afford Anything for tips on life without debt. The National Foundation for Credit Counseling site offers free consumer credit counseling.
5. Detach from your own guilt. Parents need permission to accept themselves as “good enough” parents, Boorn says.
You don’t need to throw money at your child for him or her to love you. Be kind, listen sympathetically and offer suggestions if requested (that’s a big IF), but don’t offer to pay.
“The best thing we can do for our children is to calm ourselves down and accept they have a journey to take and that we must trust them to take that journey on their own,” Boorn says.