Financially supporting a young adult/college graduate child?

Parent Cafe
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<p>Lots of interesting thoughts here. In my mind, the most beneficial circumstances for parents to be subsidizing a kid who has graduated is when the kid has a great opportunity that doesn’t pay a lot monetarily but will be helpful career-wise. </p>

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<p>My H’s concern is that parents who subsidize are harming their kids, because the subsidy deprives the kids of valuable life lessons. I really don’t think he’d let D starve, though, or live in a seriously unsafe place. Although I spent four years walking past the empty crack vials in West Philly . . . Not sure if that was a valuable life experience or not!</p>

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<p>I lived in West Philly for 12 years, and loved it, and my older d. is trying to move there now. </p>

<p>Learning to live poor can be a valuable life lesson, except it really isn’t in the cases of many of our families, as there is always a back-up. Poor people don’t have a back-up. In this case, at least it is a subsidy that might make sense career-wise. But if it was for other reasons (like 25% unemployment, or illness, or whatever) it wouldn’t be terrible either.</p>

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<p>We went into the “college” years thinking we would not subsidize our kids. We have a slightly different perspective now with a college graduate who doesn’t quite make enough to be totally on his own. So we are going to carry his cell phone for a while and his car insurance and really just taking it month by month. He is quite frugal as we did not give him any spending money in college and has worked for 7 years now since he was 16. We paid his rent this summer so he could save money and build alittle nest egg but that ends in September. He wants the independence and isn’t feeling pressured right now and was very appreciative of the 3 months rent, so we’re reacting more as a safety net going forward and not giving him anything unless he asks. </p>

<p>Our friends did the same thing with their D who was in NYC. She had a few gap months as a post graduate paid internship didn’t turn into a job and she job hunted. She was frugal and had saved some so needed a short term safety net. It took her 3 months to land a full time job and our friends paid her rent in NYC for those 3 months. They are thrilled that this is ending now and she’s “launched.” </p>

<p>I think there is a slight difference between being a safety net for your graduate and subsidizing a lifestyle. If they are really trying to break free and be self supporting it’s easy to set aside your preconceived ideas and help.</p>

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<p>PA dad, nice to see you back again! That transition from being your student’s home base to their post college independence can be an unexpectedly hard one. I always remember my good friend talking about that grief being so surprising, as that transition is less discussed than the one to college.</p>

<p>My S just started grad school in CA after 3 years in China. He’s a few thousand miles away, but it feels like just down the block, compared to northern China. </p>

<p>Interesting discussion, as my D, a new grad, is just trying to find her way. Her first shock was the internship paycheck not being nearly as large as expected, as unlike work study, taxes are taken from the check. </p>

<p>I’m a little concerned as well, because these kids have a social life that is far more expensive than I remember from my 20s. No brown rice and vegetables for get togethers with friends. They go out to restaurants, drink. All fine, but that lifestyle is not how one saves for a car or house down payment. My kids are frugal within that norm, but it is an expensive one to keep up.</p>

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<p>It would be nice but not in our house. One kid swipe a $20 from her dad’s wallet and left an “I love you dad” note.</p>

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<p>I feel that part of my job as a parent is to encourage my children to be economically responsible and independent. Towards that end, while H and I paid their college tuition (minus the Stafford loans we had them take so they had skin in the game), R & B, fees and book expenses, we never gave them allowances while they were in school. They were expected to work summers and save that money for their personal expenses. The choice to use an expensive shampoo or to order pizza instead of eating dinner in the dining hall was on them and they had to live with the economic consequences. My S (entering senior year of college) recently mentioned to me that he translated what he wanted to do into how many hours of his summer job it took him to earn that money and used that as a guideline re whether the expenditure was worth it.</p>

<p>When D graduated from college she did live at home while working her first job in her field. Before she was employed we paid for continuation of her health insurance until she had coverage through her job. She was saving for grad school and because of that we did not charge her rent, but told her we did expect her to buy groceries occasionally or even take us out to dinner, simply to do some form of reciprocation. She got full funding for grad school but needed the money she had saved for her living expenses. </p>

<p>Now she is on her own in a fairly pricey city (Boston) with a good job in her field (economics, LOL!) that pays her well. She did go a bit over her planned budget with her apartment but when she looked there was a big difference between those in her planned price range and those just a bit over, and she did choose to pay up for a place from which she could walk to work and would be well located. She decided to cut down in other areas to handle the apartment rent. She has no cable, car, etc. </p>

<p>I did keep D on our cell phone plan just because it seemed to make sense. </p>

<p>D is paying off her undergrad Stafford loans on her own. </p>

<p>H and I will visit her soon and plan to take her out to dinner, etc. and perhaps treat her to a few things for her apartment. We will also try to give her special gifts for her birthday and Christmas (restaurant certificates, a subscription to a museum or theater tickets, etc.)</p>

<p>As a poster above said, we feel that our best gift is that we be positioned for retirement such that our kids would never need to worry about having to help us down the road.</p>

<p>We do plan on future family vacations on which we will invite our adult kids and pay their way. We expect them to handle the basics of their lives and we are happy to occasionally contribute luxuries.</p>

<p>But I totally understand and respect parents who decide to help out children who are in fields which are challenging to get started in. Subsidizing rent, medical care, etc. for a kid who is in a low or unpaid internship makes perfect sense to me. </p>

<p>These are, and will continue to be, difficult economic times for many. We feel blessed that our family members are not among those struggling at this time. But we do not take it for granted and know that both our kids will have long roads ahead. So I would never say “never.”</p>

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<p>Fascinating thread. If I look back to the days of the dinosaurs (when we graduated college), this is a conversation almost no parent seemed to be having. For most of my peers, graduation = start of being responsible for everything. My folks never really had to articulate this. I knew it and graduated on Sunday, starting a full time job Monday.
Things are different now. Though I didn’t graduate into a great job market, it wasn’t as stressful a time economically for the nation as it is today. Many grads are forced to choose between a low paying job in their field (perhaps in an expensive area) to get a foot in the door and living at home. I can see how people want to help their motivated, pragmatic grads over the hump of accumulating relevant work experience. I also know how I felt empowered by taking on the world post college independently and how for some grads, parental subsidy is antithetical to growing up. I don’t think there is a one size fits all here. As a parent, I do want the joy of self sufficiency to be there for our grads ASAP, but realize there may be some incremental steps IF they are doing their part to launch.</p>

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<p>We paid.</p>

<p>My son graduated in English from a great liberal arts school where he thrived, but due to his ‘style’ and the schools location and lack of requirements for the same, he never had any relevant work experience as a college student. When he graduated he moved to DC which is where my H’s family lives. He had his own money (graduation gifts, savings, money he received from the Alaska Permanent Fund which had been well invested) and decided to live alone and in a pricey area- Dupont Circle, though in a tiny place. He figured he had enough money for 14 months living expenses. 14 months later he had a very part time job and we needed his help with a family emergency. For the next 14 months (give/take) we covered his basic expenses. He accounted for every penny he spent, this was our condition. We also required him to save some of what he was given, and he did this as well. We wanted him to get used to living on less than he had. </p>

<p>As this was all evolving, he was looking for a full time job and decided to return to grad school (we paid for undergrad 100%, grad school is on him 100%). He started in January and 2 months later he got a full time job offer in DC in the field he is studying. Now he is working full time, and goes to night school. He is super proud of himself, and we are pleased for him. It took longer than expected, and he probably could have done more to help himself find something those 14 months if he had not had money of his own to fall back on… but the experience did not in anyway deprive him of motivation, drive or ultimately the chance to land on his feet. </p>

<p>His younger brother began working immediately out of uni in a paid job related to a summer job he had the summer before. He did not earn a ton, but it was great experience. He had the same money his brother had (gifts, Permanent fund) and used this to supplement his salary and buy a car. He starts law school this fall and we gave him a gift of the equivalent amount of support we gave his brother…but he is paying for the rest. He too will be fine.</p>

<p>Different kids take on adult life at different paces. I can’t say I didn’t ‘worry’ about the eldest at certain points, but honestly we had bigger things on our plates and so I viewed his underemployment as a chance for him to help where he was needed. I know we are lucky to have been able to help as we could. Neither boy expects luxury and both have worked within every limit placed on them. If we are in a position to do so when they graduate we will probably gift them something to cover a % of their loans, but that is not their expectation. I guess I would rather give them $ now then have them pay estate taxes on it later on!!! I do not think it changes how they feel about their personal responsibilities or their need to work hard.</p>

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<p>A couple of practicalities:</p>

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<li><p>In all likelihood, your daughter can’t get that money until after her job starts. I think this is because she has to be on the payroll for the company to issue the check. So she may need to borrow money from you and pay you back when her check arrives.</p></li>
<li><p>If it’s a signing bonus, it’s taxable income. If it’s an expense reimbursement, it shouldn’t be, but there will be restrictions on how she can use the money.</p></li>
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<p>I think we overestimate the extent to which prior generations were truly financially independent from their parents. My grandparents, as adults, lived in the downstairs apartment owned by my greatgrandparents. It has not been uncommon for farm families to have several generations living and working together. Children go into the family business all the time. So, while there may not be a direct payment on behalf of a child, there has been a lot of comingling of financial fortunes among several generations in families.</p>

<p>While each case is different, I don’t think it is terribly surprising to think that your kids will need some degree of financial support for some period of time after college graduation. And, it’s not just the money, but help with managing finances, etc. While I don’t want to support my kids indefinitely, I will provide a financial “safety net” as necessary and appropriate.</p>

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<p>Yes Marian, those were indeed two of the points my D and I discussed when she shared her offer letter with me. My D had never have to worry about expenses, and this will be the first time that she will have to balance income versus expenses once she is on her own. I don’t think she fully realizes yet how much it will cost to stock an empty apartment from scratch. Hopefully, she won’t forget essentials like papers. I’ll be there for the first two days to help her out and soften the sticker shock. She is a smart girl and will be alright after a few mishaps.</p>

<p>Great lakes mon, Hi! I was having high anxiety on my D’s impending move for good, and here is where I come poking again. Trust all’s well with you.</p>

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<p>As my older son is not the most financially responsible young man, I have him deal with the consequences of overspending on what you would call “variable costs”. (food, beer, entertainment, gas, etc.) The thing I do pay for is health insurance. I am in the process of purchasing individual (high-deductible) policies for both of my twenty-somethings, and intend to spend some of their inheritance on those, even if they run in the background of employer plans. I just don’t have any confidence that as they change jobs, they will be able to have continuous coverage.</p>

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<p>My son started with an air mattress designed for camping, one lamp, and one folding chair intended for outdoor use. There was nothing else in his rather large one-bedroom suburban apartment, except for his laptop, clothes, bicycle, and kitchen stuff, all of which he already owned.</p>

<p>The technology of air mattresses seems to have improved greatly in recent decades. But dorm mattresses are still as awful as they used to be. So sleeping on an air mattress for a while may seem tolerable to young people fresh out of college.</p>

<p>Also, young people starting out may need to be explicitly told that buying used mattresses or upholstered furniture off of Craigslist is a Very Bad Idea. Tables, desks, or bookcases are fine. But not soft stuff, which could be contaminated or infested with anything imaginable (and some things that we probably cannot imagine).</p>

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<p>I think just like the various ways we all dealt with HS & UG expenses, people may require 100% independence, help a bit or help a lot. In some cases it will be too much, in many cases it will be just right.</p>

<p>We wanted to teach our kids to make value decisions with money, we gave them an allowance for clothes, toiletries, etc in HS. Expensive shampoo, cheap shampoo, etc, it was their choice.</p>

<p>For undergrad we continued in this vein, providing them with a guaranteed minimum budget, they could make many of their own choices, they worked, but they knew that as long as they were not actually being stupid with money, the basic needs were covered. One kid was stupid sometimes :frowning: </p>

<p>In grad school they are all responsible for their own basics, but we certainly help out as the feeling hits us, from a free oil change to a Costco run to a ticket home we help make life a little better.</p>

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<p>Marian, Kudo to your son and to you for that matter. I don’t want to think of my D coming home from a day’s work into an empty space when she is already in a strange city 1500 miles from home. So, I plan to march my D into a furniture store, to pick up at least the essentials.</p>

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<p>It was his own choice to minimize the furniture at first. His new job pays rather well, and he prefers to wait until he can afford higher quality things rather than buying the cheap stuff he could afford now, even if it means living in a mostly empty space for a while. He knows that it won’t be all that long before he has a well-furnished apartment.</p>

<p>His sister wouldn’t have been able to stand that. Her little city studio apartment has all the basics (bed, couch, various tables and chairs, storage cubes and boxes of several types, multiple lamps, and even an area rug), but except for the bed and the couch, all of it is low-end assemble-it-yourself stuff from IKEA or Target (which she and I put together with no male assistance – something I’m absurdly proud of).</p>

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<p>My son needs health and automobile insurance. He needs to go to the dentist. Other than those things he has been pretty much self-supporting but living at a very low level in one of the most expensive cities in the country. He is in a tough industry that depends on luck and who you know as much as talent. The economy has cost him his most recent job. He is our only child. We will not let him starve or live on the street.</p>

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<p>Re: furniture</p>

<p>It actually makes sense to minimize furniture and choose inexpensive, easy to disassemble and assemble furniture while renting. And, after assembly, tape the instructions to the bottom of the furniture so that you can take it apart for moving if necessary.</p>

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<p>Guess I’m the outlier here and what follows is stated with absolutely no judgement as to how other families approach the issue.</p>

<p>We always told our kids that we would pay for college tuition, R&B, books and travel home (except that they would also take Stafford loans) but only for four years and one undergraduate degree. At that point they are expected to be self-sufficient, so they best choose a field that will support them in whatever manner they choose to afford. Any move back home after college would be very short and transitional in nature. This was always said with the most love and encouragement possible.</p>

<p>S1 graduated last May, got a job and moved to the opposite coast. I know his starting salary only because H & I were asked to review his employment contract. I have no idea what his apartment looks like or costs, although I’ve taken a look on Google Maps Streetview. My only inkling that he has furniture was a tweet early on mentioning that he was at home waiting for the IKEA delivery. I assume he’s eating, because the pics I see on FB don’t look like he’s wasting away. He’s had his own cell phone account ever since he wanted an upgrade that we couldn’t afford (see “paying for college”) and although he bought a used car while in college, he sold it before graduation in order to save money. His job does provide health insurance and I hope he figures out how to take advantage of it, should he need to.</p>

<p>I think it’s essential that he is financially independent. Those difficult decisions as to where one spends their hard-earned cash are a part of growing up, as was the decision to take a particular job or study for a particular degree. Now it’s his life.</p>

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<p>My daughter’s firm gave her the sign on bonus after she was cleared for employment, but few months prior to graduation, so she was able to use it to apartment rental. </p>

<p>We have always said our kids would be on their on once out of college. D1 is paying for her rent and living expense. But I find myself having a hard time of breaking the habit of buying her stuff. I have ordered things online for her or if I saw a nice suit at a good price I would also just get it for her. This Wed we happened to be around when D1’s mover came to pick up her stuff to move to her new apartment (she is away at another city for training), so H paid the mover. H also went to her apartment to put some heavy stuff away, bought her a bed, and set it up. I don’t think H is going to ask D1 to pay us back. </p>

<p>We encouraged D1 to live in a safer neighborhood in Manhattan because she will be working late. This goes against what we thought we would do, but we are going to subsidize D1 a bit every month until she gets her first bonus. It’s not going to be a stretch for us, and we are also in the mind set of life is too short to have to worry that much about whether to spend 2 or 3.50 on cereal. </p>

<p>D1 is taking her new job very seriously. She is doing her training in London. They have an exam every Fri. She is one of few trainees who is studying every night instead of going out. She is doing well on those exams. So I don’t think by us making her life a bit easier is making her lazy. She also doesn’t expect us to pay for those things, we do it because we want to.</p>