Are college grads saving responsibly or spending thoughtlessly? Via Shutterstock.
Last week, CNBC shared a story about recent grads called What will it take to get grads off the couch? In this article they explain that, “half of recent graduates ages 23 to 26 rely on financial support from their families to meet their current needs.” Being 23 and among the 50 percent that does get help, I was not that surprised. Especially since among my group of close friends and family all but one or two still live at home and/or receive financial help from their parents. The question is, should this be the case?
Should college grads receive financial support from parents?
When I first graduated college I wasn’t sure what I wanted to do. Having graduated with a double major in journalism and English (and finding out newspaper life was not for me) I couldn’t decide what my next step would be. Instead of taking any full-time job I could find, my dad encouraged me to live at home while I figured it out. Finding a job that I enjoy is more important than having a high salary – and thanks to my Dad I have time to figure it out.
According to the survey, I’m not alone. The majority of graduates reported that working within their area of interest was the most important factor in career satisfaction. This is causing students to take on lower paying jobs, which leads to financial struggle. Working for a low salary to attain your dreams and choosing to live at home or accepting aid from parents seems responsible.
But, it appears that others view getting help from mom and dad very negatively. Reading through articles on the study, grads who receive financial help from parents were referred to as lazy, freeloaders, or even said to be taking advantage of parents…and this can be the case.
The question is why do grads need financial help this late in life?
One reason college grads receive financial aid from parents is to pay off college loans. Among my friends, parents often take on a loan payment or provide aid specifically to be put towards loans. Even with a full-time job paying back college debt can be extremely difficult for new grads. In a startling statistic however, 59 percent of all the survey participants said they had ZERO student loan debt! This shows that student loans aren’t the only reason recent grads are financially dependent.
On an income of between $30,000-$40,000 (the average among my friends) saving money can be tight when paying for rent and bills especially for those who live in big cities. My cousin lived at home until she was 29 and was able to put a down payment on a home, invest in stocks, and pay off the majority of her college debt. If she hadn’t lived at home (which in my opinion is equal to a huge amount of financial aid from parents) she’d be in much tougher financial situation. Alternately, I have friends who live at home who are still racking up thousands in credit card debt! If kids aren’t saving while receiving aid or living at home, it may be a good idea for parents to cut them off.
Parents often feel that helping children is their job, but after a certain age (most would say 18) giving children financial aid becomes a choice. Making a decision about helping children financially should be thought about carefully and should only be given within your means. Also, it’s important to determine if you’re helping or enabling. What do you think?
When should parents stop providing financial aid?
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Welcome to Bargain Babe! I’m Mara, and I’m so glad you’re here. I am an obsessive bargain hunter and penny pincher, and I am determined to live a full life without EVER paying full price.
My first job out of college was as a sales assistant in a firm that booked talent – opera singers, jazz musicians, string quartets. I earned $24,000 a year and lived in Manhattan! My Mom helped me with my first apartment payment (first month’s, last month’s, and security) because I did not have money saved up to sign a lease. After that, she helped me out by sending me $200 each month. One of my sisters was super generous and also sent me $100 most months for a year or so. After about two years, the money stopped coming but my Mom would occasionally pay for me to fly out to CA to visit and she would help me out by buying me clothes on our visits. I got a lot of help, at least that’s how it felt at the time.
The best part of living in my own apartment was discovering how to be an adult. I soon realized I didn’t like my job and went to grad school, which led me to journalism. Recent grads are misguided in thinking that they will go from degree to dream job. It takes years and years to figure out what you want to do, and to move up the ladder. By living at home, many grads are missing out on the crucial job and life experience that turns them into thriving, capable, and happy individuals.
I think it would be better for parents to help their children out by supplementing their income, instead of continuing to let children be fully dependent, i.e. living at home. If a grown child has their own job and wants to live at home to save money, perhaps they can have a lower rent than market, but still have them contribute financially. Of course, some families are able to support grown children for several years without diminishing their own retirement contributions and savings.
A grown child can always share an apartment, sleep on a friend’s couch, etc. There are plenty of options. And surely seeing how hard life is with a low income can motivate them to work harder, get a higher paying job, and live responsibly.