Independent Financial Future: Keep Your College Grad from Moving Back Home

Written by  //  2013/06/05  //  Career Planning  //  Comments Off on Independent Financial Future: Keep Your College Grad from Moving Back Home

Ranging from pride and happiness to concern and fear, it’s normal to have a variety of feelings about your recent college graduate’s future, including his or her potential career, finances, relationships and living arrangements. But that anxiety probably involves more than just your son or daughter’s future. According to the Pew Research Center, of the young adults ages 25-34 who are living with their parents, 53 percent said their financial situation is linked to their parents’ financial situation. If your son or daughter plans to move home after obtaining a degree, chances are he or she is moving not only back into your home but also back into your bank account.

Discuss Debt with Your Child

The average student loan debt taken on by college students is roughly $26,000, according to a 2011 report from the Project on Student Debt at The Institute of College Access & Success. Although the average can seem concerning, it isn’t the only debt college students will take on during school years. Between credit cards, car payments and other debts, it isn’t surprising that your young adult might face financial challenges after college.

Before he or she graduates or when a situation arises that suggests your child might need to move back home, talk about the debts. If you have time and your teen has not yet entered college or taken on large debts, then talk about the potential debts before he or she leaves for college.

Keep the discussion open and talk about the impact of interest rates on loans. Even a low-interest student loan can add up quickly if your son or daughter is deferring payments. Show your young adult how much interest payments can add to the loan by the time it is repaid and the increased rate of deferments or additional charges in late fees.

Make an Action Plan

Talk to your child about the next step after graduation. According to Empowering Parents, your college student needs an action plan rather than financial support when challenging situations arise. While you might decide to chip in and help pay for some expenses while your son or daughter is looking for a job, never pay for everything unless you have a clear plan for the next few months.

Depending on the situation, your action plan might include interview tips, helping your teen develop a resume or working out where he or she can help around the home until a job is available. Talk about the situation and help him or her make a realistic plan of action.

Talk About Financial Risks

Whether you’re discussing a situation where it might be necessary for him or her to move back home or you’re planning to send your child off to college in the next semester, take time to talk about financial risks your child will face. Depending on the situation, the risks he or she may face can differ. For example, Lifelock.com suggests that if your teen is just leaving for college, then you might want to discuss identity theft. By talking about credit and other risks, you’re preventing the worst case scenarios from occurring.

Prepare your teen for the real world by giving tools and information that will help. You cannot be everywhere and sometimes your son or daughter might not ask for advice throughout the college years. The best way to reduce the risk that he or she will move back in after graduation is talking about the risks, importance of credit and debts before he or she leaves home.

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