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By Jeff Bogart
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Is it possible that empty-nest syndrome will quickly be considered a subject put to rest? An era ago, when parents packed in the car and dropped kids off at school, they were confident that a diploma would secure their children a good future. Many converted children’s?bedrooms into dens or offices or sold their homes altogether, knowing their kids could be prepared to survive their very own after school.
But today that’s not the case. Given?the rising price of advanced schooling, stagnant wages and a soft economy, students are increasingly relying on loans to invest in their education. Which means most are graduating with debt loads, and leaving the nest is simply not a choice.
Nearly 70% of our nation’s 2014 graduates have education loan debt, based on data in the Institute for College Access and Success. A big element in the migration back to the nest is that this mounting debt. According to a 2014 college graduate employment survey from consulting firm Accenture, nearly 40% of 2014 graduates planned to live at home after graduation, and 42% of 2012 and 2013 graduates were living in your own home.
In an ideal world, parents would start saving for school soon after the delivery of their bundle of joy, however with the demands of the present moment, new parents can’t always save for the future. A couple’s lifestyle and expenses incurred while raising a child often trump saving for school.
Of course, many parents want to help their children in any way that they’ll, at all ages; but financially supporting grown children by dishing out loans or cash gifts can be risky. You won’t want to jeopardize your own retirement.
Here are several tips to determine that your son or daughter is moving back home.
1. Pay off debt.
The first order of business for you as well as your child is to start paying off a student loans. Should you co-signed for your child’s loan, you are on the hook if your child defaults. It’s not uncommon for school graduates and their parents (as co-signers) to have over $100,000 indebted. If neither individuals can make the payment per month, then get in touch with the lender?to go over your choices. Remember, if your son or daughter has federal loans, it’s the government’s?job to help you out.
2. Don’t touch your retirement plan.
Do not spend your 401(k) intend to reduce your student’s debt. Because you love your child more than you love yourself, you might be tempted to use?retirement funds?to help reduce his or her debt load. Don’t. You may wind up having?to maneuver along with your child and his or her family when you’re older.
3. Charge your child rent.
If you’re financially strapped, you are able to use the money towards the cost of feeding another hungry mouth in your house; otherwise, apply it to the student loans.
4. Insist that the child obtain a job.
Even if their ideal job isn’t attainable at this time, your child should start working. I’ve had clients continue to support their kids long after graduation, paying their rent, car payment, cellphone bills and more. Meanwhile, the brand new graduate wasn’t working, but rather trying to find an ideal job. While all parties knew it wasn’t what’s right to complete, they became caught in a vicious cycle with tangled-up emotions of guilt, shame and remorse. Trust me, this isn’t healthy or perhaps your child. Just about any kind of jobs are better than not doing anything; employers notice if an applicant continues to be idle for time. And besides, how can your son or daughter pay out rent with no employment?
5. Pick a budget together with your child and ensure it sticks.
That means your son or daughter might have to forgo some luxuries such as Netflix or even the latest iPhone. Don’t?will not be able to afford your lifestyle to bankroll?a lifestyle that the child?couldn’t otherwise maintain.
6. Set an acceptable goal when ever your child will move out.
This could possibly be once the loans are repaid. You’ll have and your child the financial freedom you each desire. He or she may be able to purchase a home, or at least live independently, and you can secure your retirement.
Being careful, or perhaps strict, about how exactly much give you support provide your kids is not only about teaching them how to manage their finances and become self-sufficient. At the end of your day, you don’t want to burden your children by relying?on them to deal with you financially.
So before activating the “vacancy” sign at the empty nest, think about: Can I afford this? Will supporting my child undermine my very own financial security? Ultimately, you have to take care of yourself before you can look after others, and that includes kids going back to the nest.
Image via iStock.