Feeling sentimental about your kids growing up and not needing you any longer? Take heart: They might rely on you for longer than you think (or want).
About one in three teenagers expects to remain financially dependent in some way until reaching age 30, according to a new national survey from Junior Achievement USA and Citizens Bank.
About three-quarters of them figure they’ll own a car before they hit the big 3-0. Way to keep the bar low, guys.
According to Jack Kosakowski of Junior Achievement USA, the survey results show “a disconcerting lack of confidence among teens when it comes to achieving financial goals.
“With a strong economy, you would think teens would be more optimistic,” says Kosakowski, president and CEO.
“It just demonstrates the importance of working with young people to help them better understand financial concepts and gain confidence in their ability to manage their financial futures.”
Only 44 percent say they’ll have begun saving for retirement by then, and about the same number hope to have paid off their student loans. At the same time, 60 percent of those surveyed think they’ll own homes.
There’s a disconnect there, I think, that may not be the simple optimism of youth: How do they plan to save for retirement, pay off all their student loans and still own a home?
That’s probably where the “won’t be fully independent” part comes in. If your parents will keep you on their insurance until age 26 and their phone plans forever, and if they’ll help you through cash shortfalls and/or give big money gifts for holidays and birthdays, and if they’ll give you their old car when they buy a new one or front you the down payment on that home, maybe you could do all those things. Maybe.
The future: It isn’t easy
I’m with Kosakowski in terms of teaching kids sound money practices before we loose them upon the world. They’re already aware of some of the challenges they face. Among their top concerns:
- Paying for college (47 percent)
- Not being able to live on their own (45 percent)
- Taxes (43 percent)
- Getting a fulfilling job that pays well (40 percent)
- Credit card debt (34 percent)
- Not knowing enough about investing (28 percent)
One-third of those surveyed cited “not having the skills to manage money” as a major concern. Money management options are complex, and the stakes are higher: When I was a young ’un people could still:
- Buy homes and raise families on one salary
- Find high-paying factory jobs (no college needed)
- Reasonably expect pensions (how many people do you know who have pensions these days?)
That last one is particularly acute. Imagine graduating from college with student debt and a starter salary. Not everyone takes out loans and some people do land decently paid jobs right out of the chute. According to the survey, though, 34 percent of male respondents and 40 percent of female ones believe they’ll be able to earn even $35,000 a year in their first full-time job after high school.
Gross pay of less than $3,000 per month + at least some student debt + the high cost of living on your own = Help me! I can’t do this on my own!
Retirement: Theirs, and yours
Here’s the stat that frustrates me: Some 44 percent believe they’ll be able to start saving for retirement by age 30. However, that could mean starting as late as 29 years and 364 days — and it also means that nearly six in 10 youths believe they won’t be able to begin during the most auspicious decade, their 20s.
It’s worth mentioning that in some cultures grown kids stay home until they marry. In addition, a multigenerational home can be a good thing: Young adults get a chance to take the right jobs vs. the first ones they’re offered, and their aging parents get some help around the place.
It’s also worth noting that many folks like to help their kids. (I know I do.) But becoming too soft a place to land can delay or even derail our own retirement planning. And as personal finance expert Liz Weston notes, we might not be doing our kids any favors.
“Supporting able-bodied children or repeatedly bailing them out of debt creates dependency when parents should help them become self-sufficient,” she writes in a NerdWallet article called “When your kid is a financial train wreck.”
It’s okay to help our kids as much as we safely can – and once more, one of the best ways to do that is through educating them about money so that ultimately they’ll be fine all by themselves. Model responsible money habits. Teach by example. Show them how that deferring gratification is a useful life skill. (My daughter touches on this in a hilarious column called, “Baby Heather was possessed! And other money tales.”)
What if you feel you can’t teach them enough about personal finance? For starters, just doing the things noted above is huge. Here’s how much we have. Here’s how much we need to live on and save for the future. And here’s how that shakes down: It’s called a budget, but what it really is is the key to independence and a good life.
I also recommend two books:
“Not Your Parents’ Money Book: Making, Saving and Spending Your Money” by Jean Chatzky
“Make Your Kid A Money Genius! (Even If You’re Not): A Parents’ Guide For Kids 3 to 23” by Beth Kobliner
And before anyone else can say it: No doubt some of today’s kids are lazy and soft, i.e., they don’t want to work hard and have “I deserve everything” mentality. This has likely been true of part of every generation since we first crawled out of the swamps.
Please keep in mind that they’re also facing some pretty daunting tasks. I don’t envy them. In fact, I am grateful not to be growing up in an economy – and a consumerist culture – like this one.
Readers: What are your thoughts on financially dependent offspring?
Related reading:
- Wealthy people think you could live on less
- This isn’t your grandparents’ recession
- College is optional. Education is not
Since my son is a full time PhD student we’ve been supporting him longer than most parents. He gets a stipend most of the year. We’ve supported him by paying insurance, cell phone, and a few other bills.
Thankfully he’s graduating soon with a nice paycheck waiting for him.
Not a minute too soon since I am trying to retire soon after he starts working.
Congratulations to him, and kudos to you and your husband. Many parents enjoy helping their kids — heck, I’d pay off Abby’s house if I could — but some are actually harming their offspring. You guys are doing it right.
Dear Donna, I’m receiving two each of your emails and I wonder if you would be so kind as to correct your records. I tried unsubscribing from one but was unsuccessful in removing just one subscription. I’ve been following you for years and thank you for all that I’ve learned from you. Thank you!
Sent you an e-mail. Thanks for bringing this to my attention.
My eldest just fledged a couple of months ago. He only moved one town over, but we’ve only seen him a couple of times since then, including the everyone-in-the-family housewarming he threw. I was worried about his lack of cooking skills, but he’s been getting Hello Fresh and learning by doing. He insisted on getting everything for the apartment new, but at least he’d saved up for it and didn’t rack up credit card debt.
Here in the Boston area, we’re paying the highest rents in the nation. Seriously, you can’t rent a box with “Fido” written on it for less than $2K a month. It’s frustrating for the kids as well as the parents. My daughter would move out if she could. My son solved that particular problem by signing up to teach in Japan for 2 years. An extreme solution, I know, but he’s loving the adventure and being on his own, too.
Sounds like a win-win for your son. As for your daughter, it must be frustrating to start out in life knowing that no matter how hard you work, you’ll likely have trouble paying the rent and can’t even think about buying a place.
As I said: I’m grateful not to be coming up in this economy/culture, and have grave concerns about how my great-nephews will make it. Alaska is pretty expensive, too, and the oil won’t last forever.
Young adults outside the tech industry have a hard time living on a middle-class income — if they can even earn that much. Housing costs here will take your breath away. Mortgage payments may be half or more of that supposed middle-class salary. A late-model used car by a maker whose vehicles are likely to run a decade or so can cost 15 to 25 grand. And don’t even think about the cost of raising a kid.
We transmit two kinds of capital to our children: cultural capital (education, values, family milieu & the like) and financial capital. Both are central to class in this country.
If you want your kid to attain and stay in the middle class, then you want to make sure the kid acquires both kinds of capital from her or his parents. This is why I try to conserve my savings in retirement and hope not to live to extreme old age: I want my son to inherit enough to maintain himself in the middle class throughout the remainder of his life. Even though he’s very frugal and careful with money, what he can earn in Arizona with a bachelor’s degree from an expensive private college will not be enough to keep him in the middle class without inheriting something from me and his father.
Hear, hear.
Ugh, this is my nightmare. I might have clawed my way out of the lower class income and NW bands, FOR NOW, I am incredibly worried about how to equip JB with all the skills needed to make it in life. This isn’t just about handing JB money, far from it, I want to make sure that as long as ze is physically capable, ze has the abilities needed to cope with what life throws at zir. We’ll do our best. (But then I also wonder if there’s any point to all of this because climate change may well destroy the world as we know it by 2050. Another major worry.)
We have had help from my parents and my in laws in many many ways. They have provided 5 years of childcare for my Buttercup, in turn, I do pay my parents cel phone bill and have bailed them out on some things.
My mother in law helps us with a little cash each month towards whatever I feel it should go to, usually her daycare payments.
We also purchased my husband’s childhood home and our down payment was provided by a gift of equity from them.
So needless to say, they take care of us in alot of ways, but we also take care of both sets in others.
Like, MIL thinks I am magical because I find things online for her.
So I guess it’s good to be needed.
about 15-16 years ago, I met a woman who was in her late 40s who had 3 grown children in their early 20’s. Two of them lived at home – the third had been living at home, until he was arrested and was currently incarcerated.
Both of the kids living at home, had full time jobs – neither of them were paying any rent to mom and dad. One of them was spending a good chunk of his earnings on boarding a horse at a nearby stable (!!!)
All of this would have been fine – except MOM wasn’t able to afford to support the kids this way – she was describing how every her Christmas present from HER parents was that they would pay off the $10,000-15,000 outstanding on her credit cards that was the difference between her income and expenses over the year.
Mom may have moved out – but her parents were still supporting her. I remember her telling me that she could not afford to live in this area – every month her costs were higher than her income.
I’m not sure what she ended up doing – I was just doing tech support at the law firm where she worked and only talked to her the one time. But I hope that she figured out how to make whatever changes were needed to get herself on track – and to get her kids to be more self-sufficient!
Dependence even unto the third generation….