Today’s rising costs and stagnant earnings are especially hard on young people. Many recent college graduates can’t even afford to leave home. Some are overburdened with student loan payments, car payments, and credit card debt. When you factor in current housing costs, it’s easy to see why so many young adults need help from their parents.
However, there’s a fine line between helping your kids get started and enabling them to stay dependent. If your children live at home, you should expect them to contribute to the household. Even full-time students can share household chores and hold down part-time jobs to help pay for room and board. If practical, you can employ your children in your business, but if you do, they should be expected to earn their wages.
Near-adult children often drive the best cars in their households. Children excel at convincing their parents that autos are necessities and new cars are “safer” than used cars. Since new cars are unaffordable for most young adults, their parents end up footing the bill.
Before helping your child buy a car, determine whether the purchase is really necessary. Are work and/or school within reasonable walking distance? Is public transportation available? Is using a bicycle feasible? If none of these alternatives will work, enlist your child’s aid in finding and buying an affordable but reliable used car. The child should pay at least part of the purchase price and be responsible for insurance and operating expenses. Alternatively, consider replacing your own vehicle and selling your old car to your child at its trade-in value.
Self-reliance is one of the greatest gifts you can offer your children. Through teaching and setting a good example, you can help your children become financially responsible and independent adults.
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