It's the thought that has kept you up at night for years. It's the reason behind the nagging and scolding to be safe and bring home your lunchbox. It's the secret question behind each question that starts out like, "Why would you even think you should do...". We wonder for years before they're actually ready to leave home, will our child have the right stuff to do so? With all the discussion in the media of late of "boomerang" kids, young adults who move out and go to college, only to graduate and come right back to mom and dad, it's a valid question.
Over 60% of new college grads are getting their diploma and packing their bags, to come right back to their old room. And they come bearing gifts - over 50% have student loan debt with payments that are due, oh right about now. The average college student is graduating to the reality of credit card debt and comes home with credit card payments, a car payment, and student loan payments and is quite possibly unemployed.
This is not what we envisioned as the beginning of their future. But is it really a tight job market that our grads are coming into that is forcing them to flock back to the nest? Is it the fairly new phenomena called "quarter life crisis"? What can we do now to make sure that our young adults are prepared to make it on their own?
One thing that can be the turning point for a young grad that is in debt is to have a work history. Yes, having a degree is wonderful and important and will carry you further in your career of choice than no degree; but the summers you worked the drive-thru at the fast food restaurant gave you a degree in people skills. The unpaid internship gave you the awesome opportunity to understand the power of networking. The spring break you spent working as a temp gave you a Masters in marketing yourself. A young graduate with little or no work history will find themselves pitted against graduates with the same grades and a list of references. Guess who will get hired? In a tight job market, experience, even if it isn't necessarily relative, gives you a leg up.
Some experience as a self-employed person or any entrepreneurial background is a wonderful asset to have on your resume and make sure that your young adult gives themselves the kudos they deserve in regard to these enterprises. Sure, not every young person can say they invented the last Internet craze in the garage, but you learned some core business building concepts from that stint as a landscaper too. Make sure a perspective employer knows it.
If your young adult didn't learn about credit, debt or budgeting before they left home, one of the best ways to make sure that they will be able to leave home eventually and successfully, is to give them one now. Before your child takes on student loans, make sure that you both understand what you're signing up for. Know when the payments start, how much they will be and start your grad on a budget to allow them to afford those payments when they're a freshman instead of waiting for four years. The same applies to any lines of credit or other loans that they take out in the early years. Make sure you and they know and understand the terms of their financing. Make sure they are getting the most affordable financing they can get and that they understand the power of establishing a good credit rating early on.
Without a good credit rating, moving out may be stalled for an even longer period of time. Buying a home or even renting an apartment can be an almost impossible dream for those with poor credit scores. Future employers do also check your credit scores. Insurance companies, who can raise or lower your rates, check your credit scores. The power of that little number in your financial life is amazing; make sure your grad understands early on that it can take them places.
Making payments on time is obviously key to keeping that score high. But also make sure you and they understand that the best way to keep your credit score high is to make sure they don't use more than half of the credit available to them. Too many young people get a first credit card in the mail and see the limit is $5,000; thinking, "Great, I can spend $5,000." Not only is the first step to credit card debt but the credit reporting agencies see a maxed out credit card as a sign of bad things to come.
Perhaps the single most important thing that we as parents can do to ensure our kids are ready to go is to believe in their abilities. They need the power of your faith in them. No matter how old they are; they may no longer need your approval but they will always need to feel that you believe that they really can do anything.
Instilling this self-confidence starts early and it is the one preparation you can start making Day 1. You think they can walk; they walk. You think they can run a paper route; they do. You think they can graduate; they can. The power of your belief and the support your grad will find in knowing that their parents have faith in their abilities will be the most important first step in launching their own lives.
Want to make sure that your child can make it in the adult world? Start now by building their confidence and you'll have a young adult who takes a quarter life crisis and a tough job market in stride and makes their own way through it all.
About the Author
Cheryl Hall (www.MillionaireKids101.com) has the keys for parents to help their children become financially successful. She has created 3 courses to help children learn how to think about money and start on the road to wealth and independence; Millionaire Kids 101, 201 and Millionaire Masters. Cheryl is a successful real estate investor and has been helping new investors start on their w