When I grew up – I was an only child – there was my mom, my dad, and me. When I graduated from college, I took my first job in central Illinois over 1,000 miles away from my parent’s home in Virginia.
I wasn’t unique. In those days, no one I knew – or even heard about – remained living at home once schooling was completed. Many even took summer jobs away from home. The world has changed.
According to a study in 2010 by researchers at Columbia University using the U.S. Current Population Survey, 52.8% of 18- to 24-year-olds were living at home, up from 47.3% in 1970. The study also showed that one-in-seven young adults is are entering their 20s with no pathway to financial and economic independence.1
One advantage of being an experienced (read: older) advisor is that, in many cases, I’ve actually lived many of the experiences I write about and help clients plan for: Caring for aging parents with Alzheimer’s (ten years), dealing with wealth transfer issues, and caring for adult children – and their children, too – are all things I can talk about from first-hand experience.
Many of the lessons include the financial impact of doing – or failing to do – the things that did, or could have, made a big difference in everyone’s lives.
For parents with live-in adult children,it can be trying; But, it can also be rewarding. Part of you truly enjoys having a lot of family all together – and grandchildren add a lot of life to a home. The flipside, of course, is that you know they need to learn independence; and, if there’s a free ride, there’s little incentive to leave the nest.
People dealing with special needs children face a myriad of other issues arise: What happens to them financially if something happens to the family’s main provider? Leaving a sizable death benefit may sound like enough; but, what if they can’t manage money? How will they budget, pay bills, or hold a job if they can’t handle basic math?
While we’re lucky – in our family, it’s surprisingly harmonious – there can be friction from time to time in any home, especially when financial issues are involved.
Getting your financial ducks lined-Up. Here are a few tips that help get the process moving in the right direction:
- Track your expenditures. You need to know where money is going. It’s not that hard, really. If you have even basic bookkeeping software, you can set-up spending categories. Here’s an abbreviated example of what some categories might look like. You’ll get the idea:
- Trash pickup
- Ser vice
- Dining out
- Special Events
- Health, Disability, Long-term-care
- Adult child’s name – share of out of pocket costs
- Food – special
- (add others as they arise)
Begin with a basic category list, then add others as you need them. Keeping receipts and entering them is easy. The biggest problem is your own inertia. If you’re used to not paying attention, it might be time to start.
- Set-up your Accounts: Household checking and a cash account for you and your spouse.
- Paying their fair share. If your adult child is working, s/he can share in the costs noted above; but, if not, they can still earn their way:
- A job-search plan – with accountability meetings. If s/he had a job, they’d have those meetings there, wouldn’t they?
- Doing their share of household chores – no free ride.
- Separate the individual costs. Is your live-at-home son or daughter a finicky eater? Do they demand certain foods or sundries that you would not buy otherwise? See the ‘Food-Special’ category above. If you’re making the purchase, they go into that account. Otherwise, let them pay for those items themselves. They may quit drinking gourmet coffees at ridiculous prices.
Like everything else in life, it’s better when there’s a plan and a process. Once there’s a roadmap and process, everyone knows where they’re headed.
1Source: Columbia University, National Center for Children in Poverty, “A Profile of Disconnected Young Adults in 2010,” December 2010 (latest available). Our thanks to Wealth Management Solutions, Inc., for this information.
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Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® serving private clients since 1991. Opinions expressed are those of the author and do not represent the opinions of IFG any IFG affiliate or associated entity.
The Independent Financial Group is a fee-only registered investment advisor with clients located across the U.S. He is also licensed for insurance as an independent agent under California license 0C00742. Jim can be reached at 805.265.5416 or (from outside California) at 800.257.6659.
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