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Your Grown Child: How Much Should You Help?

Don't Go There

A study by the National Foundation for Credit Counseling shows that 64 percent of all students graduating from college owe at least $1,843 on their credit cards. Twenty percent have credit card debt of $10,000 or more.

Only you can decide if, and how much, you'll help your kids once they go out on their own. If you've supported him all his life and paid his way—or helped to pay his way through college, you may well feel, as many parents do, that you're off the hook. You've gotten him this far, and now it's time for him to make it financially on his own.

That doesn't necessarily mean that you'll never crack open your wallet and hand him a twenty or two. And you may still buy that lamp or set of sheets that you find on sale at the department store for Charlie to use in his new apartment. You'll be happy for he and his girlfriend to share the big house you rent at the beach this summer, and you're always glad to take them out to dinner when they're in town.

Basically, however, you might feel that your days of being responsible for financially supporting Charlie have ended.

Remember, though, that we've been assuming Charlie has graduated from college and is heading for a fairly good job with a decent starting take-home pay. As you know, that's not always the case.

But what if Charlie didn't have the benefit of college and is trying to make it on his own with only a relatively low-paying job? Or what if he's finished college, but hasn't been able to land a job in his field? What if his girlfriend just told him that she's pregnant and they're going to get married? Or he's been sick and unable to work? Or he's trying to pay back college loans while getting started in his own apartment and pay for the car he needed to buy so he could drive to work?

Many young people come out of college seriously in debt. If he's been to graduate school, he may be even further in the hole.

A recent survey by Nellie Mae, provider of more student loans than any other nonprofit firm in the country, shows some frightening statistics about college grads and debt. The survey of 2,500 men and women who had just graduated from college reveals that their average debt was $18,800. That's compared with $8,200 average debt a decade ago. Students just coming out of graduate school averaged debt of $24,500. That includes education loans and other debt, such as credit cards and automobile loans.

If your son or daughter has worked hard to get through college, took out loans to pay her way, and is struggling to pay off her debt so she can move ahead financially, should you help her if you're able to? If so, how much?

This is basically a philosophical question, for which the answer varies dramatically from family to family. Some parents feel very strongly that their financial obligation ends when their child turns 18, while others continue supporting kids for years and years.

If you do decide to help out a son or daughter financially so he can move on or improve her current living situation, to what extent would you do so? Consider the possibilities listed as follows:

Don't Go There

Don't assume that, if you decide to help out your adult son or daughter financially, that it gives you the right to control his or her life. If you feel that contributing money gives you a right to impose your opinions, be sure your son or daughter realizes that before accepting your gift.

Money Morsel

Some health insurance policies allow you to include your child until she turns 23 years old. You may be able to help her out by keeping her on your policy until she gets a job that includes health coverage.

  • You'll repay his college loans, with the understanding that your financial obligations end at that time.

  • You'll give him the first couple month's rent and security deposit for his new apartment.

  • You'll continue to have her live at home, paying no rent and not contributing to any of the household expenses.

  • You'll set her up completely in an apartment and pay half of her rent until she's financially established.

  • You'll buy a small, fairly inexpensive car for him to drive back and forth from work, and then tell him that your financial support has ended.

  • You'll promise to provide the down payment for his first house, regardless of when it is that he buys the home.

  • You'll promise to pay for her wedding, or to help pay for her wedding.

  • You'll give your child no financial support, either because you can't afford to, or you choose not to.

All these are possibilities for ways you could help out your kids if you choose to do so. Let's face it. Nearly everyone can use a little financial help now and then. Whether your child will get it from you, or have to see another source, is between you and her.

More on: Family Finances

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Excerpted from The Complete Idiot's Guide to Personal Finance in Your 40s and 50s © 2002 by Sarah Young Fisher and Susan Shelly. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.

To order this book visit the Idiot's Guide web site or call 1-800-253-6476.


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