How Boomer Parents Can Set Financial Boundaries With Their Millennial Kids
You probably heard about Michael Rotondo, the 30-year-old New Yorker recently ordered by a judge to vacate his parents’ home. The story made national news — and for good reason. The notion of a young person “failing to launch” is every parent’s nightmare.
Resorting to use the justice system to evict your Millennial child is more than a bit extreme. That said, there’s no doubt that this is a teachable moment for boomer parents whose adult children are living with them or are dependent on them in some way.
While some adult children may still need financial assistance — only 81% of Millennials are employed full-time, according to PNC’s Millennials & Investing survey — it’s important for parents to set boundaries and guidelines with them. This will help their adult kids achieve independence and self-sufficiency at a reasonable age.
Here are five ways Boomer parents can have meaningful conversations and instill financial confidence in their Millennial children:
The first step is to fully understand what you are trying to accomplish and what you are willing to do for your child (without resentment).
There is a thin, often fuzzy, line between supporting and enabling your adult child. You want to make sure he or she is healthy and taken care of, but as an adult, the experience should be different from the way you provided care as a child.
I recommend writing down a comprehensive list of all the expenses associated with supporting your adult child and being as specific as possible about them.
Consider Maslow’s hierarchy of needs: At its base are things like food and shelter. Those needs seem straightforward, right? Actually, they aren’t.
For instance, are you willing to pay for your grown child’s groceries and dining-out expenses? What if he or she goes out to dinner with friends? Should you be responsible for footing that tab?
Also, don’t forget about the hidden costs of things like health insurance, car insurance, vehicle maintenance, gas and even job-hunting expenses (professional wardrobe, resumé assistance and the like.).
Once you create that comprehensive list, review it with your adult child and develop a plan outlining who is responsible for each expense. This exercise really should be done together; that creates more of a partnership and provides upfront clarity.
I recommend capturing this plan on paper and even having all parties sign the agreement. This helps minimize ongoing negotiation of every expense, especially ones that fall into a gray area.
A critical component to this agreement: an expiration date for when you will stop providing financial assistance, to prompt focus and urgency.
This agreement should not be considered static; in fact, it should be reviewed and amended periodically as needed.
For instance, you might want to consider a time-based review such as doing one quarterly, semi-annually or annually. Perhaps an event-based review makes more sense; you may want to adjust the agreement when your adult child gets a job or goes back to school.
Everyone’s situation is different, but there must be an understanding between you and your child that things can, and likely will, change depending on circumstances.
As evidenced by the Rotondo story, there are some adult children who — despite their parents’ best efforts — will not proactively take steps toward independence. Extreme cases like those, unfortunately, may require a dose of tough love.
Failure is a powerful teacher. Don’t stunt your child’s growth by protecting him or her from failing.
Before things reach the level of a court-ordered eviction, teach your grown son or daughter to be self-sufficient. For example, end the practice of “the credit card in case of emergencies.” Ideally, your child should be contributing to an emergency fund so he or she can financially handle an emergency.
Many parents are tempted to co-sign leases or other loans with their adult child; I’d advise against doing so. As hard as it may seem to say no to the request, the reality is that if your grown kid needs a co-signer, he or she likely can’t afford the monthly payments.
As a parent myself, I sympathize with, and understand, the desire to help your grown child. No one wants to see their kids endure hardships or feel disappointment. However, part of your role as a parent is to teach your adult children to be their own selves and help them grow up to be successful, functioning members of society.
By setting boundaries and guidelines, you have a greater chance of accomplishing that goal. The payoff of seeing your Millennial make his or her mark on the world without your financial assistance will be worth it in the end!
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