Helping Out Our College Grads


Touring my old neighborhood in Logan Circle with my daughter recently, looking for her first one-bedroom apartment without roommates, I was shocked to find that the average rent was north of $2,000.

What 20-something, much less a recent college graduate, can afford that rent by herself? I often hear people say that they don’t know how kids these days can afford to live, but this didn’t sound right.

I went home and crunched some numbers. When I lived in my daughter’s neighborhood 34 years ago, my rent was $875 with an inflation rate of three percent. That same rent would be $2,390 today. I did some more math. My starting salary was $18,000, which is the equivalent of $49,175 today.

It is any wonder that over the next couple of weeks college graduates all across the country will be accepting jobs, packing their bags and moving back in with their parents?

As parents we have raised our children, begged them to do their homework, sent them packing for college and cheered at their college graduations. After they graduate, it’s time for them move out, pay rent and start contributing to their 401(k), right?
It’s harder than ever for college graduates to find jobs, afford rent and pay off rising student-loan interest rates. Even more worrisome, only one in four Americans has emergency savings. We, their parents, are the primary source of help when our graduates have to deal with emergencies.

This got me thinking. Maybe, if we really want our children to be independent, we should welcome them back home rather than encourage them to move into an apartment they cannot afford without our financial support. Perhaps we are making the biggest parenting mistake of all by helping them with money, rather than with wisdom and experience.

This is the time to help our recent college grads get a head start on their financial future by saving for law school tuition, for a down payment on their first house or for the seed money to launch their own business.

But no matter what it is, make them pay. If they move back home, mandate that they save the monthly equivalent of rent in the community they want to live in, teach them to maintain a budget, encourage them to sign up for online money-management apps and show them how to grow their credit score.

After a couple months, they will have saved enough money for an emergency fund and to splurge on life experiences. You will have taught them to live within their income, while giving them the tools and understanding to save systematically. Perhaps most important, you have also given yourself the time to get to know your kids as adults, a friendship that you will treasure.

Walking around my old stomping grounds with my successful, financially independent daughter reminded me that parenting sometimes means being flexible. But when you get to watch them set themselves free, it is worth every penny.

A registered principal of Cambridge Investment Research and an Investment Advisor Representative of Capital Investment Advisors in Bethesda, Maryland, John E. Girouard is the author of “Take Back Your Money” and “The Ten Truths of Wealth Creation.”

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