Grown ups or kids, which are they?

Has your grown child failed to launch or have they returned after the first bump in the road? With the tough economy young adults are having a hard time getting stared. This does not mean you have to pay for everything or necessarily anything at all, as they get started.

If they are 40 and still at home they are not going to get started they have missed the boat altogether. The exception to this is if they have come home to care for you or to be cared for because of illness.

If the kid is 25 or26 living at home not going to school or just doing one course at a time they may need a little help to get going. STOP PAYING FOR EVERYTHING. Make them start to pay. But they don’t have a job....well  it is time for them to take what ever they can and contribute. It is ok to wash floors and work at the local fast food joint, even with a degree. Some thing better will come along but until then they need to contribute.

If they do have a job make sure they are paying their way, rent, food, electrical, water, and  their own transportation.  Give according to your means. Set limits so that it work to their advantage to move out and explore the world on their own away from the nest. 

You may ask, “Why should I do this?” If you continue to supply everything  for ever they will not launch and you will not be doing them any good. They need to be independent so they can care for you or live well after you are gone. If you keep them at home they are cutting into your retirement plans. The amount you will have to retire on will be less or you may have to work a few years longer. Is that what you want?

Just to bring it home. Here is the cost of having them at home.

$500 for room and board... food, water, electrical, heating, wear and tear, 

$60  for the cell

$40 for other things

$600 each month ... $600 set aside each month for retirement seem a better way to be using your money. This, of course, does not include the tax refund you get for putting it in an RRSP or interest earned.

The High Cost of Grown Kids

According to Money’s “Americans and their Money” survey, 38% of people give $1000–$4999 per year to their adult children.  These are not just the margins - this is across the board.

An article on www.time.com/money/page/parentsofadultchildrefinancialsuppot/, states that 25% of adults aged 25-34 still live at home, compared to 11% in 1980.  Only about half of all kids one year out of college, have a full time job.  This is a combination of the economy and the unending support of modern parents.

There is no longer a stigma attached to living at home. Whatever the reason for our kids still being in the nest, we should ask the question “Do grown children benefit from another 3-7 years of nurturing, or are we coddling beyond reason?”  The answer to this question is up to you.

Some thing to consider

·         Will providing money help them become independent, or will it prolong dependence?

·         Reserve your help for needs only not wants.

·         Be frank and state your limits .

·         Is it time for tough love?

·         What are you getting in return?  Charge rent or have an expectation of contribution.

·         Are you giving according to your means?

·         When will the gravy train stop?  Have a clear exit plan.

Winter Vacations

Oh yes, a winter vacation away from the cold!  But wait - did you save for it?

If you did save, then great; go ahead and have a great time, but do stay on budget.  Only use your credit card if the cash is there to pay when you get home. Otherwise, regret may set in and ruin the memories of your vacation.

If you have not saved for a winter vacation, then staying home may be the best option.  Consider visiting relatives, or find a local activity to enjoy.

I have crunched some numbers to show what that impulse vacation could cost.  As always, the numbers are conservative.

$1500.00 for a week in the sun on a credit card at 19%, paid off in 12 months (138.31/ month), equals interest payments of $159.72.  The total cost of the vacation will be $1659.72.  If you can afford $138.31 every month after your vacation, then consider saving the $138.31 before the vacation.

If we take that same vacation and pay it off at $100.00/ month with 19% interest, it will take 18 months, and cost you $226.22 in interest. My question to you is, could you not have saved the $100/for 18 months and had $1800.00 at the start of the vacation?

When you get home from that vacation you have saved for, start to save for the next one.

Christmas Leftovers

 

That $1000 Christmas bill that showed up in January could keep on giving. Imagine being in a position to pay it off when it arrives; now, that is a true gift.

First, what do you value more than anything? For me that would be time with the people I love the most. Christmas is about many things, but the most important is sharing our love for each other.  This may not be family; it can be anyone.  My question to you is, of that $1000, how much did you spend out of love and how much out of obligation.

I can love my daughter with a $100 gift and time, or I can feel obliged to spend this or more because I have in the past and she expects it now. If you purchase a gift, purchase one that you can afford and that you know the person would like.  I could buy my daughter $100 perfume that I know she loves and wants but I cannot afford, or the $24 pair of merino wool socks that she will love and I can afford.  With the gift of wool socks, she is happy and I am not stressed.

There is another type of obligation that we face at this time; the gift we give because we must.  You have always given your sister a gift so you continue to do so.  You are now both in your 50’s and neither of you really needs anything.  It is so hard to find the right thing.  First, let her know that you are no longer giving her a Christmas gift.  If she lives out of town, then send her a very nice hand written card.  If she lives in town, then continue to spend the day together but skip the gift.

These are a couple of ways to help make those bills smaller.  Start now and save for this event all year round.   By saving just $50 per month, you will have $600 by next Christmas.  The hole you create in your budget at Christmas, will be smaller or none at all.