What to do when adult kids are bad with money?
Time.com has a helpful slide show of 10 tips for parents when their adult kids are just starting out, have debt or are just bad with money.
Some of the tips are obvious such as let them fail sometimes, encourage or help them pay off their student loans (as we already learned this week) and encourage them to save.
One of my favorite tips is charge rent if they try to come back home. Not charging them rent, feeding them and God Forbid doing their laundry is not going to encourage them to leave. My brother came home for short stint and my mom made his life for uncomfortable. He quickly moved back out. (Funny thing is I don’t think she was trying to annoy him I just think she wanted her house kept a certain way.)
I can’t pull the whole list so make sure you click through but here were a few I thought were the most interesting. Here are a few of the tips from Time.com:
No. 1 : Claim them on YOUR taxes: “…The unemployment rate for 20- to 24-years-olds is 15% and so it’s likely that many college graduates, and even not-so-recent graduates, will want to return home for a bit. If that’s the case in your family, don’t miss the financial upside: You may be able to claim your new “houseguest” as a dependent and get a tax break of $3,650. The IRS says you can claim your child as a dependent if they are under 24, spent more than four months of the year as a full-time student, live at home and rely on you for at least half of their annual expenses. After 24, the rules change. Your child no longer has to live at home. But they have to make less than $3,650 a year, and still rely on you for half their annual support.
No. 4: “Keep Your Credit Separate: Adding an adult child to your credit cards or establishing a joint account might seem to be an easy way to repair or boost their credit. But it may not be as good of an idea as it appears, especially if your child has had problems with debt in the past. Studies have shown that three-quarters of co-signers end up paying the loans taken out by their less thrifty credit partners. What’s more, if your child misses a payment on a joint card, it will drag down your credit score as well. That may make it tough for you to borrow should you run into an emergency.”
No. 8: “Be Aware of Income Tax Rules: If you are giving money to your grown children after they move out of the house, that money is considered income for them. Parents are allowed to give $13,000 ($26,000 for couples) tax-free each year to each of their kids. More than that generates a taxable event. If you want to give more, consider paying for your kids to finish college or get another degree. Education spending, as long as you pay it directly to the school, is exempt from the gift-tax cap. Because most people do not work in the same field as their major, even with a college education your child may benefit from more training or schooling.”
How are you financially educating your younger kids, tweens and teens? Are you doing any of these steps on the list? Do you have kids back at home with you? Are you charging rent? Did you get a credit card with them?
What were you biggest successes and failures with your adult kids and money?
– Theresa Walsh Giarrusso, ajc.com Momania. I have increased my Twitter activity. I am sending out great stories for moms each day focusing on health, fitness, sex, entertainment, food, travel and obviously parenting! So follow me on Twitter at @AJCMOMania!)
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33 comments Add your comment
JJ
May 12th, 2011
1:02 pm
Interestingly enough….we are having this discussion in my house right now..I told my daughter today, she was cut off financially. NO MORE MONEY until she gets a job. I will pay her to mow the lawn today, and I will give her $20 for gas in her car, but until she is employed full time, that’s it. Hopefully that will motivate her to get a job. She has been interviewed at Taco Mac twice, but waiting for the general manager to return from Europe to actually hire her.
Once she gets that job, I will help her out until her first paycheck. Then she’s on her own. With gas at $4.00/gal I cannot afford to fill up two cars at about $60/per car….She has to save at least 50% of everything she makes, to help pay for her education. If she choses not to continue with college, then I will save that money for her for a nest egg for when she is ready to move out, hopefully in January, 2012……
I will continue to provide a roof over her head and pay for the utilities…..but she needs to take on some financial responsibility. When she does get a job, and starts bringing home a paycheck, she will be responsible for gas in her car, insurance and her entertainment. Eventually, she will take care of her share of the cell phone bill.
If this continues past January 2012, then she will have to start paying part of the utilities as long as she is living in my house.
Techmom
May 12th, 2011
1:20 pm
Seriously, if you’re giving your adult child more than $13k a year, you’ve failed as a parent.
shaggy
May 12th, 2011
1:21 pm
Cut them OFF faster than an odd shaped mole on Meghan McCain.
Techmom
May 12th, 2011
1:21 pm
How old is your daughter JJ?
JJ
May 12th, 2011
1:30 pm
@Techmom- she’s 20….just finished her second year of college.
I always told her as long as she was in school I would support her. But now she’s out, and I don’t know what she is doing in the fall. She talked about taking some on-line classes and maybe going to Gainesville for a class of two……but this summer, she needs to get a job.
catlady
May 12th, 2011
1:50 pm
I have a friend who is still supporting his non-working daughter who has been out of college for 6 years and has not stayed in school long enough to accumulate 3 years of credits, off and on. On top of that she lies to him constantly to get additional money. I could not stand that!
Photius
May 12th, 2011
1:54 pm
Parents today are too weak, simply cut them off and quit bailing them out. Giving them money does not equate into showing them how much you love them. Too many parents keep making excuses for their adult child and keep them on the dole for a long time, then complain when they themselves created the situation entirely. Cut them off at 18. If they don’t have money, they will find a job. If they screw things up, suffer the consequences.
Kat
May 12th, 2011
2:00 pm
Send them to a financial class – most continuing education programs have one for budgeting, investing and so on. Tell them that you’ll pay for it, so they can see what (how much) they are in for in the “real” world. Or, they could take an online class with Dave Ramsey or something. Better yet, YOU go with them to 1) ensure they go and 2) learn something yourself.
mom2alex&max
May 12th, 2011
2:00 pm
whoa JJ what happened??? Just last week you were raving about how proud you were of her! Why did she drop out?
JJ
May 12th, 2011
2:07 pm
@Mom2Alex&Max – She didn’t drop out. There was just enough money in the 529 Plan to get her through a two year program, but that well has run dry..LOL. If she choses to continue her college education, she has to start paying for it. I get tuition money back on my taxes, and I think there’s enough money for one more semester. However, she has talked about taking a few on-line classes, which would be perfect for a working girl….. and a little cheaper than going back to Middle Georgia and living in a dorm, and paying for a meal plan.
mom2alex&max
May 12th, 2011
2:10 pm
Oh ok.
jbm
May 12th, 2011
2:22 pm
My 19 year old daugher works at Longhorns and goes to school. She pays her cell, car payment, insurance, clothes and entertainment. The only time I give her $$ is for birthdays, Christmas etc. She has worked since she was 16 and has bought all her clothes other than gifts from us. I’m very proud of her but I see her 16 year old sister going in the opposite direction and it scares me big time.
jarvis
May 12th, 2011
2:23 pm
@Photius, parents today?
My uncle lived off of my grandmother until she died at age 87 in the mid-90’s. He’s 71 now, has continued to “borrow” from our family, and has never owned a house or a car that he has paid for.
I know MANY deadbeats from your generation that lived off of their parents. Leeching isn’t a new concept.
Becky
May 12th, 2011
2:35 pm
I know someone that is still giving her 44 year old son money..He has a full time job, but can only manage to work about 33ish hrs. per week.. His Mom has “loaned” him enough money to buy a truck, a car, move into a house and fed him lunch every day (during the week) for over 4 years..Then he moved back home and she helped him to “settle” a bunch of bills that him and the girlfriend owed..
He stayed at home for about a year before moving in with the current girlfriend..While at home, his Mom did all cooking, laundry, pays still) his cell phone bill and furnished him a car to drive, plus paid for the ins. and gas..He wrecked the car, then got mad at his Mom because when the ins. settled, she didn’t give him the money so that he could buy him a car..
Now he has to have back surgery and told the Mom that he has to live at her house during his recovery time and that since he won’t be drawing a paycheck, she will have to buy him his beer and cigarettes for the 6 weeks that he’s there..
I agree with Photious..Cut them off at a certain age..Both of my sister’s two boys were given a huge suicase at the age of 18..They survived…A little help every once in a while is ok, but you do have to draw the line somewhere…
JJ
May 12th, 2011
2:58 pm
I’ve been working since I was 14 and on my own since I was 19,…..
shaggy
May 12th, 2011
3:02 pm
You get that which you will accept.
If jarvis’ grandmother accepts his uncle, the leech, living off of her, that IS what she got. If jarvis’ family accepts that dear deadbeat uncle has taken money from them and continues to give money to DDU, that IS EXACTLY what you get.
Photius’ observation about “parents today” is spot on, and well documented. I personally know about 6 families, with 40+ year old “kids” living at home, doing absolutely nothing but emulating jarvis’ uncle. Maybe jarvis’ uncle is a slacker icon/idol/guru or some horse squeeze that these burdens of society worship on a national level and share his profound thoughts. I personally couldn’t care less, because they will NEVER get that from me, because I’LL NOT ACCEPT IT.
However, if these professional losers/moochers/jarvis’ uncles were CUT OFF, they would either sink or swim…Guaranteed!
Old Sandra
May 12th, 2011
3:24 pm
Well, we don’t have adult children yet but I would think that everyone needs a hand sometimes, even adult children. Life is unfair and there are some folks out there that just seem to get the raw end of the deal more than everyone else. So as long as my kids are trying their best and working hard then I will always be there for them and would have no qualms about giving them a hand up.
Theresa Walsh Giarrusso
May 12th, 2011
3:28 pm
a third topic up for today — a crazy one — botox for an 8-year-old?
http://blogs.ajc.com/momania/2011/05/12/botox-for-an-8-year-old/
Photius
May 12th, 2011
3:30 pm
Hi Jarvis – I’m not that old. I was with the 1st Battalion 8th Marines in Beirut in 1983 as a Lance Corporal, figure out my age.
Parents today in general are too protective, too soft and provide way too much of a safety net when in fact what they are doing is a disservice for thier adult children. Today’s Helicopter Parents I sincerely believe are some of the worst. Children have to fail and recover on their own or else you will raise a totally dependent child. So cut the kid off at age 18. Pay for their school if you can, but make them work in college to pay for their spending money. If they are out of high school cut off all money and they will force themselves to find work. It’s very simple parenting but many parents equivilate a warped concept of love for their child via financial assistance and it does more harm than good – but it sure makes the parent feel better.
Georgia Girl
May 12th, 2011
3:33 pm
This is not something that comes about on the day a child turns 18. This is something (like the manners discussed yesterday) that should be taught throughout their lives as they grow. Young children can earn allowances and do small jobs around the house, and then learn to save and spend their own money.
My parents took care of the necessities but if we wanted to go out with friends or drive somewhere or buy new clothes, that was on us. I learned a lot about taking pride in having a job and the responsibility that teaches in itself. I was babysitting and officiating soccer games when I was 13 or so, got a waitressing job for the weekends in high school. And from there, I was never without at least one job and sometimes held 2. All the way through college.
Again, not only did I learn how to EARN money, but also how to save and how to prioritize what I wanted/needed. I understand that these are tough times to be graduating and entering the workforce but there are really important lessons to be learned in overcoming obstacles. My husband and I are on one income now while he gets his degree but we pay our bills and limit our spending. And I know that my parents would help us out if we absolutely needed it, but that’s a last resort in my mind.
To conclude my long-winded post (my apologies!), start from the beginning in teaching your children how to earn and manage their own money and you can avoid having to “cut them off” in the future, because they wouldn’t be on the payroll to begin with!
Old Sandra
May 12th, 2011
3:42 pm
Although I don’t think I will have to worry that much expecially about my youngest son. Since we have been home, about two weeks, he has found £25 in stores, on sidewalks and etc. For Christmas he wanted a metal detector and that same morning he had it out and was scanning our front lawn. When it went off he tried to dig but the ground was frozen solid so he waited until it thawed, went back out and dug up £2. Just in our front lawn he has so far dug up £7.
shaggy
May 12th, 2011
3:45 pm
Photius,
You were there?
Thanks very much for your service, and I am truly sorry for the brave souls lost there in that criminal action. I am pretty sure many that post here will not make an immediate connection, but it registered instantly with me.
I hope the posters here will at least look this up.
mom of 3
May 12th, 2011
3:49 pm
Our youngest goes to Ga State, works as a waitress at Mellow Mushroom and hasn’t ask us for money in 2 years now. She lives on her own, has loans and grants for school and supports herself.
It can be done and I couldn’t be more amazed at how she is handling herself and her finances.
We have 6 kids between us so we decided—–21 age of an adult – you are on your own. If you need, we will let you move back in and we will feed you with a deadline on moving out and you will have chores just like when you were younger. No money for going out. All they get is a room to live in and food to eat. None have moved back and all are making their own way. You have to drawer a line as parents.
motherjanegoose
May 12th, 2011
3:50 pm
Kudos Georgia Girl!
Mine have both worked since they were 13…and are reasonably good with their finances.
As mentioned before, daughter left for college with several thousand dollars in her account.
She has worked part time all year and still has several thousand. She manages her own money
and is fairly prudent.
Our son is a math whiz but was not as quick with finances, when he started out of the chute…at college. He is much better now! He lives by himself and pays his own way. We do sometimes help out with car expenses and also food from Costco. His car needed some help on M and hubby took care of it. Took it in for brake work and changed the serpentine belt himself. He has had if for for 8 years. He paid for it. We pay the liability insurance ( $50 per month) and his cell phone ( also about $50 per month).
Old Sandra
May 12th, 2011
3:53 pm
Now the military is one career that I don’t want for any of my kids. I had an uncle in Korea, my dad was in Vietnam, one sibling was in Iraq, another sibling was in Afganistan, hubby was in the RAF and served in Bosnia and Angola with the UN and was an exchange officer with the US Marines. Been there done that so don’t want any more of the tee-shirts.
lakerat
May 12th, 2011
4:03 pm
Both sons knew that we would support them through college and that was it – the older one is just now finishing the 3rd year of med school and has one more to go, and then 2-5 years of residency, depending upon what field in which he chooses to specialize – all this is on his own dime as he has gotten loans out the wazoo (for med school only) that will start being due after next May when he graduates form med school (timely topic from earlier this week) – but, according to Clark Howard and Dave Ramsey, he is (hopefully) in one of those “professions” in which even they say it is OK to go into debt because the future is “hopefully” bright, financially speaking. He had no debt coming out of college as he maintained HOPE all four years and worked some, though we did support him generously while in college.
The younger son graduated from college last May – we generously supported him all four years of college, too, and he graduated on time. He knew when he came home last summer that he had until Sept. 1 to live under our roof – he had a difficult time finding employment, but he did find full time work in September (at a really mediocre salare whn compared to many of his friends, so he made his deadline. He thought about going to grad school but did not want to incur any debt. He is now on his own dime completely, with his margine for error ever so slim, financially speaking – but he has not asked for anything in the 6-7 months he has been employed.
And, to top it all off, 30 days after he moved out I was laid off from my job – and nobody wants to hire an old, highly paid, highly credentialled insurance person, even though I would work cheap – but, that “working cheap” is a two edged sword as potential employers only see that I am overly qualified and “probably would not stay long” (so they think), or that I must really be a bad employee since I was the one laid off – but my guess is that they are just biased against old workers.
Good thing we planned well financially for the past 35 years, as we are just fine, even with $4 gas and high health insurance premiums since we are both “retired” at age 58, and Social Security does not kick in until age 62 and retirement pay (meager as it is) will not start until age 65!
jarvis
May 12th, 2011
4:09 pm
Photius, I figure you’re about 48?
I agree with you on the notion that the kids need to be on their own at 18. I was. With the brief exception of when I came home following college at 22 for 2 months, I’ve always been on my own, and I think I’m a better man for it.
My only argument was that it isn’t a new concept the whole never moving out thing. I already gave you the example of my uncle, but I also have a co-worker whose husband (he’s in his 50’s) lived at his parent’s home until he was 40….then he bought a house in the same neighborhood.
jarvis
May 12th, 2011
4:10 pm
Photius, off subject…were you injured in the attack?
Techmom
May 12th, 2011
4:11 pm
Old Sandra, I think there’s a definite difference between helping someone out when unexpected circumstances arise and perpetual mooching.
Photius
May 12th, 2011
4:25 pm
Jarvis, almost 48! Everyday above ground is a good day for all in life.
motherjanegoose
May 12th, 2011
4:32 pm
Thanks for your service Photius, Our son scored a 97 on the ASVAB and they were calling ALL the time. Hubby was Navy and Grandpa was Air Force.
JJ…can your daughter just use her HOPE and finish while living at home?
I was on my own at 19 and know it was tough not to be able to call my parents, who drove a new and paid for Lincoln to visit me at school, when I had unexpected financial issues. My friends never got that. We want ours to be independent but we will be their safety net.
djm_NC
May 12th, 2011
7:54 pm
my kids have always worked as soon as they could push a mower….my youngest daughter who just finished her associates science in chemistry degree has paid her way since she was 13 doing any job she could find. she always pays for her own car repairs and insurance and gas…clothes etc….any kids that has finished high school and needs to move back home for whatever reason has to pay their way and do chores. its my house now. they always will have a place to stay and food to eat if needed but its not free by any means. i have had (and do now) kids move in with me that arent mine for various reasons….they also have to pay their way and follow my rules. if they dont like it they can go where they dont have rules. whereever that may be lol
Jessica
May 12th, 2011
9:50 pm
I know a couple whose policy is that their adult children can move back in anytime they want; however, they will be subject to the same house rules as when they were teenagers — get home at reasonable hour, assigned chores, attend church with the family, etc.
The mom says it works out great. Moving back in isn’t a very attractive option, but they know that they have somewhere to go if they really need help.