Parents with college students making this dangerous mistake, financial expert says
It’s graduation season again. As college students graduate, they walk across the stage to pick up their diplomas and then walk right back home to mom and dad’s house.
More than one third of young adults between ages 18 and 34 lived at home in 2015, up from 26 percent in 2005, according to census data. Many parents don’t charge rent to their returning progeny, but some financial experts say they should pay their share of the real estate.
Financial expert and author of ‘Everyday Millionaires’ Chris Hogan believes this is an opportunity to help young people to really step into adulthood. They need guidance and steps that are necessary.
“If they are gonna come back home before college or starting their career, parents need to have an open ended, realistic conversation. Set boundaries. Start to talk about the conversation. How long are they gonna live there? What are they gonna be responsible for paying while they’re there? The most dangerous thing I’ve seen is letting young adults come home without any kind financial expectation," Hogan told FOX Business’ Maria Bartiromo on Tuesday
Young adults often take a lot of flak for moving back home after college, and are called lazy and entitled for living with their parents. But that’s not always the case. Some millennials use the opportunity, thanks to their parents’ generosity, to find a job, get situated and save money for their futures. As a result, when they do buy homes, they’re skipping the starter home buying and saving for a big home in the suburbs as they look for a larger home.
“This is a teaching moment. An opportunity to help young people understand that hey, life isn’t free. There are costs there. So, whether its $100, $200, or $300 -- contributing something helps them to feel responsible and makes them feel like they’re doing something and not just have their feet propped out,” said Hogan. “Parents set boundaries, have expectations, and help them understand how money works.”
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Millennials—the generation just older than recent college graduates—have found home buying to be particularly hard. Between staggering student loan debt and other financial obligations, they are having trouble saving for a down payment, according to the National Association of Realtors and education financing nonprofit American Student Assistance. As a result, they’re delaying purchasing their first homes, or starter homes, and are saving for their larger homes in the suburbs