Launching Financial Grownups E-Book

Bobbi Rebell

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 389

Veröffentlichungsjahr: 2022

Beschreibung

Learn how to give the young adults in your life the knowledge, confidence, and motivation to make adult money decisions, and create their own strong financial foundation and independence, so you can all live richer lives. In Launching Financial Grownups, popular personal finance expert and Certified Financial Planner Bobbi Rebell gets candid about the very real-life challenges of getting young adults to choose to be financial grownups and develop their own financial foundation and security. She shares her own personal setbacks and solutions (both from her own past, and as a parent), and walks readers through the ups and downs of financial adulting milestones. Rebell has put together a practical and specific adulting launch plan for parents of young adults along with tips on how to open money discussions, the questions to ask your children, the most effective listening strategies, when to step in to stop them from making mistakes, and when to let them learn from their mistakes. Launching Financial Grownups provides the tools to help your teen or young adults navigate the challenges of adulthood including debt, credit cards, peer pressure that leads to bad money decisions, negotiations, how to manage their own household, different investing opportunities, insurance needs, charitable giving, the legal documents they need to have in place in case of an emergency, what they need to know about your finances and even starting to think about their retirement planning. All this while also addressing recent demographic trends driven by the pandemic including young adults moving back into their childhood homes, and becoming financially dependent, after having been independent. Launching Financial Grownups offers: * Solutions for parents who want to avoid 'cutting off' their kids at a seemingly arbitrary age or life milestone and are looking for more supportive solutions to get their young adults to be well adjusted financial grownups. * Strategies for parents to protect their own financial well-being and retirement resources. * Advice from top parenting and money experts including "How to Raise an Adult" author Julie Lythcott-Haims, "The Price You Pay for College" author Ron Lieber, "Grown and Flown" co-author Mary Dell Harrington, Tori Dunlap of "Her First 100K", "How to be a Happier Parent" author KJ Dell'Antonia, Tonya Rapley of My Fab Finance and Jean Chatzky, author and CEO of HerMoney Media Essential for the parents, grandparents, aunts, uncles, friends and everyone who is vested in the financial success and independence of young adults, Launching Financial Grownups is a must-have financial resource for long-overdue and timeless advice in an engaging and supportive package.

Leseprobe

Launching Financial Grownups

Live Your Richest Life by Helping Your (Almost) Adult Kids Become Everyday Money Smart

BOBBI REBELL

Copyright © 2022 by Bobbi Rebell. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging- in- Publication Data

Names: Rebell, Bobbi, author.

Title: Launching financial grownups : live your richest life by helping your (almost) adult kids become everyday money smart / by Bobbi Rebell, CFP.

Description: Hoboken, New Jersey : Wiley, [2022] | Includes index.

Identifiers: LCCN 2021062800 (print) | LCCN 2021062801 (ebook) | ISBN 9781119850069 (cloth) | ISBN 9781119850083 (adobe pdf) | ISBN 9781119850076 (epub)

Subjects: LCSH: Young adults—Finance, Personal. | Teenagers—Finance, Personal. | Financial literacy.

Classification: LCC HG179 .R336 2022 (print) | LCC HG179 (ebook) | DDC 332.024084/2—dc23/eng/20220112

LC record available at https://lccn.loc.gov/2021062800

LC ebook record available at https://lccn.loc.gov/2021062801

Cover Design: Wiley

Cover Image: © ihba/Adobe Stock

For my father, Arthur Rebelland in memory of my mother, Adele Rebell

Foreword

I will never forget my first television interview with the incredible Bobbi Rebell at Reuters in 2016. We were new friends, having met a few weeks earlier when she moderated a panel I was on at the 92nd Street Y in New York City. We chatted afterwards, and I remember meeting her husband, Neil, who had come to the event to support her. We all bonded over our mutual interest in making money less intimidating.

Bobbi, who was a global business news anchor at Thomson Reuters at the time, asked if I would do an interview with her about my latest project. After 15 years, I had updated my #1 New York Times bestselling book The Automatic Millionaire, and Bobbi wanted to amplify the critical messages this little book has taught millions. Over our talk together I highlighted the simple, yet life-changing power of paying yourself first, saving money automatically, and the importance of buying a home. Once again, we found ourselves very much in agreement as I explained my belief that there are really two primary escalators to building wealth in America – investing in stocks and in real estate – and the sooner you start investing, the easier everything in life is. Bobbi had bought her first home at age 23 and had been investing since she was a teen. But her dad worked on Wall Street, and she had a very proactive grandfather who pushed her to learn about investing at a young age. She knew she was more the exception than the rule. She also realized she had learned about investing from family, not from school.

And so Bobbi asked me, “why don't they teach this stuff in school?” I told her that was a great question. The Automatic Millionaire has sold over 1.5 million copies and truth be told, it shouldn't have been needed. Everything that I share in this book should have been taught in school before we reached tenth grade. The interview inevitably turned to a problem that Bobbi and I are both concerned about: The single biggest mistake we as adults make is that we don't teach our kids specific, adult, everyday and long-term money skills. Our kids become grownups and often make financial mistakes right out of the gate that can set them back for decades, often for life. Life would be easier for everyone, I said, if our schools had a mandatory financial education class that you had to pass to graduate.

After the interview, Bobbi asked me to do another interview for her syndicated personal finance column and we continued this conversation. “David,” she said, “your next book should be a book about kids and money. You should write a book parents can use to teach their almost-adult children real-world money life skills because the schools aren't getting it done.” I laughed, having just updated three books in a year. I was also working on finishing my thirteenth book, The Latte Factor.

I said, “I'm never going to write another financial book. You, my friend, should write this book!”

“Maybe I will,” she said.

And then, fortunately for us all, Bobbi did.

The book you now hold in your hands, Launching Financial Grownups, is truly sensational and critically important if you are a parent or grandparent, or you simply have a young person in your life you care deeply about and want to help be smarter with their money. I am very grateful Bobbi wrote this book because my family is going to use it!

What I love about this book is that Launching Financial Grownups is not only about generational wealth education, but also about relationships and communication. There are fantastic books out there focused on teaching little kids basic money skills. But Bobbi is speaking to parents, grandparents, and others in older generations about young adults, ages 16 to 26. Those years are critical. We may always see our children as our precious babies, but the truth is we need to learn how to let them be their own financial grownups when they are ready. And it is our job to get them ready.

The book presents a curriculum tied to adulting milestones for which all of us need to be prepared. We owe it to our kids to get them ready for both the opportunities and the challenges that will come their way. Candidly, this book was a wake-up call for me and my family. I have two boys, ages 18 and 12. My oldest will head to college soon, and reading this book is a reminder that I have much work to do to really prepare him for the financial journey he's about to encounter, both in college and out in the “real world.” I am grateful for the roadmap in this wonderfully written book. The stories and interviews Bobbi did with leading parenting and money experts, as well as psychologists and therapists, make this enjoyable, relatable, and actionable. I know it can help you educate and protect your family and give you the skills to empower the next generation.

Let's be honest. It's not easy to launch a financial grownup, and yet the benefits will be well worth the effort. This book will show you and your kids and loved ones the way. I believe if we provided our children with mandatory financial education in school, much of the financial struggles we see could be fixed. I also have come to accept that in our lifetime, financial education in school will not happen on a national level that is test-based and a part of the core curriculum.

That's where this book comes in. We are the ultimate stakeholders in our young adults' financial success. And no one is exempt. Even the kids of wealthy parents can burn through an inheritance pretty fast without the right education and guardrails. Many of us have nurtured our kids through childhood, praising every accomplishment and trying to make their lives easier because we love them more than anything. But we often don't stop and purposefully think about the life skills they will need to launch as their own independent financial grownups. Letting go is hard. But that's part of the deal when you become a parent. Don't worry – it's not too late! But the time is now.

Bobbi has provided us all with a fabulous guide to Launching Financial Grownups. I welcome you to this journey and I salute your efforts. You are about to do important work.

To your richest life.

David Bach10-time New York Times bestselling author, including The Automatic Millionaire®; Smart Women Finish Rich®; Start Late, Finish Rich®; and The Latte Factor®

Preface

Tuesday, May 25, 2021

This was one of the happiest days of my life.

It was not my wedding day.

It was not the day I had a child.

It was not the day I celebrated a big family milestone or career achievement.

And ironically, it was not because it was the day I signed the contract for this book, which happened as well.

The joy came in a windowless conference room in midtown Manhattan on a gray spring day, where I sat with my husband and 24-year-old stepdaughter, signing piles of very grownup documents that would make Ashley a homeowner. The event followed two years of her living at home to save money after college, including the COVID-19 pandemic when we were all home all the time.

Looking back, I can remember so many times I thought this day would never come. This moment did not come without many setbacks and very tough discussions. Yes, at age 24 Ashley was buying a New York City co-op apartment. Because of the particulars that apply to the Manhattan market, my husband and I had to cosign. But it wasn't our money paying for the apartment or the closing costs. Nor would we be paying anything toward the ongoing costs of home ownership. Ashley was on her own for this project, as we liked to call it.

She would now be on the hook for monthly maintenance, a mortgage, and of course the Wi-Fi bill. If the building had an assessment, it was all hers. Laundry time? She was on-duty as well. The same goes for sourcing all the things that had to go into her new home and managing a new stream of bills, including homeowners' insurance and New York City real estate taxes. We were done. She was fully aware of every expense in her new and financially independent life. She had budget projections and a good-enough emergency fund.

Earlier that day we had done a walk-through of the L-shaped studio apartment that was to become Ashley's new home. She had been saving for this dream since she was 13 years old. While my husband, Neil, Ashley, and the real estate agents went around checking that the outlets were working and the appliances were functional, I stood there watching — and tears of both happiness and terror started to flow.

I was 23 years old when I became a homeowner. Like Ashley, I lived at home after college. As a journalist, my job didn't pay as well as her consulting job does, relatively speaking, so I had temporary help from my parents, with a specific cutoff schedule. We jokingly called it an exit strategy. That early and specific push to homeownership and the financial awareness that it forced me to understand were the foundation of my future interest in finding and sharing the best ways for young adults to create their own financial lives.

There is no one path. Homeownership is just one road that can be taken to create an adult financial life separate from parents or other family who may have taken care of you up to that point. We'll talk about many other potential routes to launching financial grownups here. But I do believe most of us share a common goal: To give our children the gift of knowing they have everything they need to be financially independent of us.

One of the experts you will hear from in this book, parenting coach Allison Task, explains why a focus on finances is so essential in helping our kids mature into their grownup lives. “One of my clients said to me, ‘I do not want to deprive my daughter of the opportunity to earn and pay for their first shitty car. I'm not depriving my daughter of the pride of ownership.'” Task went on to explain that the mother is wealthy and could easily buy a fancy car, like the Porsches and BMWs that are all over their neighborhood. But she had a very specific reason for not choosing to do that. “Neurologically, there's something to the pursuit and the earning and the satisfaction of that thing [Mare] Winningham talks about in St. Elmo's Fire (Columbia Pictures, 1985):

Yea … ya wanna know what's great? Last night I woke up in the middle of the night to make myself a peanut butter and jelly sandwich … and ya know, it was my kitchen, it was my refrigerator, it was my apartment … and it was the BEST peanut butter and jelly sandwich that I have had in my entire life.

Who knew that in 2021, as I write this book, that urge to create one's own life and declare adult independence would have become so complicated – and even controversial? The coronavirus amplified a trend that has been growing. Countless adult-age children returned home to quarantine with their parents, including my own 21- and 24-year-olds.

At first this appeared to be a new complication for my mission to help parents raise financial grownups, a project I started several years ago. After all, young adults could now more easily fall back into childhood roles – and who were we to do anything but welcome them to extend their stay in our homes or return. It was a global pandemic. We wanted them safe at home: our home.

Countless millennials and Gen Zers were taking work calls and attending class on Zoom from their childhood bedrooms. Was allowance far behind? Did they expect Mom to make them a grilled cheese sandwich for lunch and do their laundry, too? How was this going to work? And how much of a detour would this be for them in establishing their own financially independent lives?

Everyone's job seemed to be at risk or already gone. Family businesses were in crisis. No one knew what the future would hold – or when the kids would move out again.

Time went on. Families, including my own, settled in. We temporarily moved out of the city to a house in upstate New York, where we expected to live for “15 days to stop the spread,” as the authorities famously put it. It soon became clear that was an unrealistic timeline and we were in this for the long haul.

Our first night at the house, we sat down and had a meal together. Our 12-year-old noted that this had never happened before with all five of us. He was right. We were always on different schedules and never thought to do anything about it. Talk about feeling like a bad parent.

Then family meals kept happening. Like many families who no longer had kids and parents coming and going from school, activities, and work, we started to really enjoy the daily ritual. We kind of liked having “the kids,” around even though they were in their twenties, at home. A routine developed. My husband, stepdaughter, and I were all working. My stepson finished out his sophomore year at college virtually from his bedroom. My 12-year-old completed sixth grade via Zoom. We were all at home all the time. We were less busy. There was a lot less logistical planning and more hanging out. We weren't running late to get somewhere. There was time. We started talking more.

Some of those talks were with our older kids about our own finances, because sometimes they were in the room when things came up. We had avoided sharing much when they were younger because we did not want them to worry – or to know where we'd messed up. They had never expressed much interest. Their college tuition bills were paid, and as far as they knew we never had any stumbles. They had no idea all the ups and downs we had over the years. It became apparent that we had sheltered them too much by not giving them a realistic view into adult financial realities.

On the upside, it became clear that with so much upheaval in the world, the older kids were more willing to listen. They were hearing stories about massive job losses. They were worried and asking questions. They were paying attention to our answers. It was starting to sink in: their financial outlook was closely tied to ours.

And since they were quarantined, they had nowhere to go.

We had a captive audience.

We also started to realize that this financial dialogue was a two-way street. We were all stakeholders. The conversation was about more than teaching them financial independence from us so we could have our financial freedom. We needed our kids to know more so they could be our backstop in case the unimaginable ever happened. What if we needed them to take care of us? Living through the coronavirus pandemic created a new urgency to make sure our kids were ready for the next who knows what.

We were not alone. I started to hear stories of kids leaving school to come home and help save their parents’ businesses. Many stepped up to help out with bills. Family finances tend to become a lot more transparent in a crisis. I have been so impressed with all the young adults who rose to the challenge of giving back to their parents when they needed them most.

That is the silver lining in this unique chapter of our lives. The time families are spending together has created a season of our family evolution where we have had few distractions and many opportunities to better understand each other. Families have bonded in a common mission: to protect the family financial ecosystem. It's one thing to “get financially naked” with your partner; it's another to do it with your kids no matter their age.

The door has been opened to financial conversations happening more often and more organically. It's pretty much impossible to filter conversations when you are with everyone all the time. People started to let down their guard while we were quarantined. Information leaked out. And we started to see things we used to be too busy to notice.

For my family, because we are all in the same place, all the time, the kids literally see how intensely my husband and I work. They see how our cashflow expectations can sometimes impact our decision-making. They have a front row seat to witness tough decisions we sometimes make about how best to spend our money. They also see that we still make some mistakes along the way and that it is not always smooth sailing. They see how frustrated we get when we can't buy something because we have to allocate savings to something urgent and unexpected, like a big repair or a medical bill. They see us make tough choices about spending and how often we can go out with friends to nice dinners. They know our financial resources are not unlimited despite each of our accomplishments.

On the flip side, we have also been able to see more clearly why the kids make decisions that used to baffle us. We observe more and can better understand the context. Money conversations that used to focus on simply getting money to pay for something they want have largely gone away. When they do come up, there is a new sense of appreciation of all the work it takes for us to earn the money to give to them.

Will this progress in communication and transparency last when the world opens up again and we no longer have a captive audience? Let's hope.

For families, I see an opportunity to hit the restart button on some of the bad habits we as a society have developed that undermine our true goal: launching the next generation of financial grownups and giving all of us the best shot at the financial security and freedom that we all deserve.

Introduction

In October 2019, Kelly Ripa appeared on The Jimmy Kimmel Show and joked about how her son, Michael, was adjusting to being an adult: “He hates paying his own rent, and he's chronically poor. I don't think he ever really experienced extreme poverty like now.”

The comment, taken by some out of context, sparked some backlash. But Ripa stood by her parenting strategy, posting later on Instagram, “Michael goes to college and is a senior and works full time. He is in his first non-parent subsidized apt with roommates. I didn't grow up privileged and neither did @instasuelos [her husband, Mark Consuelos].”

The truth is, Ripa and her husband are probably doing a better job at helping their kids become financial grownups than the majority of Americans. Data from Merrill Lynch and Age Wave shows that 79 percent of parents are providing support for their adult children.1 As so-called helicopter parents get older, they seem to be doubling down on their overparenting. This is having a huge impact on their adult children's ability to gain financial independence. Many aging Gen X parents are on a dangerous path that could have catastrophic consequences for their own golden years. I first witnessed this phenomenon as a parent. And then, as a business journalist and a certified financial planner™, I realized I could become part of the solution.

It started on New Year's Eve 2019.

My two older kids, both in college, had come home for the holidays. We had been discussing putting their earnings from their jobs into Roth IRAs. They would then be able to grow their money without paying taxes on the earnings. They both had agreed to do it. #parentingwin

Yet here we were, hours away from the deadline to open an account. It wasn't done. Nothing was happening. I had given them both the phone number and email of the brokerage firm we used as well as the contact information for an actual human they could call with questions who had been assigned to our family. I had told them that I was available if they had any questions. And they were free to research and find their own investing platform if they didn't want to use the same company. I had reminded them of the deadline. They had said they would do it.

But here we were.

And here I was, having spent a couple of decades as a financial journalist. I actually wrote the book about becoming a “financial grownup.” After the book came out, I had gone one step further to bolster my knowledge and became a CERTIFIED FINANCIAL PLANNER™ practitioner. I was facing the harsh reality that I, as a parent who knew on paper what should be getting done, could not get my own kids to do this one simple thing.

My own journey into this laser focus on getting adult kids to pay attention to their personal money situation started a few years earlier when I was a full-time business news journalist at Reuters. After 15 years in the business, I was the old guard. Younger colleagues would ask me for money advice. I always thought that was odd, because literally everything is available online. (The IRS website, irs.gov, if we are being honest, is pretty awesome. Check it out sometime.)

But the advice was never put in human terms, so it felt like a chore to them. They wanted to hear from someone they viewed as accomplished. They wanted to hear how successful people – role models – made financial decisions in the context of real life. And of these financial decisions, they wanted to know which ones were the most important for accomplishing their larger adult goals. From my experience offering guidance to my younger colleagues, I came up with the idea for my first book, How to Be a Financial Grownup.

In my years of journalism, one skill that had carried me far was my ability to identify and then get high-profile people to be interviewed. I always made sure they had a great experience, so they would come back. At one point, when I led booking at CNN's short-lived business news network, CNNfn, I supervised a staff that scheduled as many as 50 guests a day on various programs. I loved chatting with them before and after the segment. The guests were fascinating people with so much more to say than the three minutes typical of a television segment – often focused on data and quick tips – would allow. They had valuable life lessons to share. But a short television segment did not allow for that.

And then the big idea: What if I could give these high-profile people the opportunity to share personal money stories, not just regurgitate the data their company compiled in a survey. Now that would motivate and inspire readers to become financial grownups. I started close to home with the editor in chief of Thomson Reuters: Steve Adler. He loved the concept but was skeptical about whether I would be able to get what were effectively business “celebrities” to really share personal stories. That said, he was the first one to agree to participate, and I am forever grateful.

In the end, I pulled it off. How to Be a Financial Grownup featured a mix of business headliners from Tony Robbins, Kevin O'Leary, and Sallie Krawcheck to Cynthia Rowley and Jim Cramer. I even managed to snag an impromptu interview with actress and entrepreneur Drew Barrymore. I extended the concept in podcast form, and with about 350 episodes have been able to continue the conversation with young adults (and financially young adults of all ages) through that platform.

But I've also come to realize as my own children become young adults that parents play a bigger role than many of us fully appreciate. In an ideal world, my young colleagues at Reuters who were so hungry for money advice would have started their journey toward financial literacy at home.

Sometimes we, the parents, are the obstacles keeping them from truly growing into their own and moving away from dependence on us. The term helicopter parent grew in our culture for a reason. It's pretty accurate for many of us. If we coddle our kids financially, they will feel safe and protected. If we had a tough time in our own childhood, we want to shield them from the pain. Life is stressful enough. We want them to have an ideal, blissful, carefree childhood. But then what? How will they ever be on their own? And how will we secure our retirement if we continue to support the next generation at the expense of ourselves.

The urgency of this was becoming more apparent.

Here's the thing: if young adults don't launch as financial grownups, we, their parents, will not have the financial freedom we deserve and need as we age and move into our golden years. Without our children's independence, we risk our very survival. We pay for things for our kids with the best intentions. They are working hard. They deserve it, right? Plus, we don't want them to worry about us financially, and if we say no they might think we can't afford it and that we are in financial trouble and then panic.

Our own egos play a role. We've been trained that our #1 priority is to make our kids feel safe and secure. But in reality, our top priority should be giving our kids the skills they need – including financial skills – to survive and thrive independently from us. The coronavirus pandemic has amplified the urgency of this cultural phenomenon. In the spring of 2020 when the U.S. government began to implement stay-at-home orders, multigenerational living situations became much more common. College students were sent home from their dorms to continue learning online. Many young adults in their twenties left their roommates to shelter with their parents and sometimes grandparents. Suddenly everything we took for granted about the typical life stages of young adults was turned upside down.

With that came countless money questions. If a 20-something child came home, would they contribute financially to the household? How would that look? Many parents reported suddenly finding themselves at a loss. There was no precedent for the situation. Who pays for what? It seemed weird to charge the kids for groceries or for the Netflix account.

What if the kids were still employed but a parent was one of the millions of Americans who lost their job because of all the mandatory shutdowns? Would the child then support the parents? For how long? How would this in turn impact the next generation's ability to move forward as financially independent adults. What if there were grandparents in the mix? What would their place in the family look like from a financial perspective? How would everyone communicate and resolve expectations?

The pandemic has created a new layer of urgency to get our intergenerational money situation in order. Parents who spent more than they could afford supporting adult children may not have enough saved in an emergency fund for a rainy day – or a pandemic. They could become a financial burden on those very children, potentially creating a multigenerational downward spiral. And as we have seen with the pandemic, the economic balance can change faster than we imagine.

We may not have as much time as we think.

New data finds that nearly half of empty nester parents still financially support their adult children. And it's not just a one-time cash injection to buy a first home. The support often includes groceries, rent, cell phone bills, car payments, and dining out, according to data from 55places, an adult community comparison site.2 According to a report by Merrill Lynch and Age Wave, 58 percent of young adults ages 18–34 say they can't afford their lifestyles without parental support. And parents who expect eternal gratitude from their children may get an unwelcome surprise as the kids get older. According to financial psychologist and CFP® certificant Brad Klontz, subsidizing adult children can backfire:

It's not just dependence on money. It's a whole psychological syndrome. It basically leads to people who are less motivated, having less passion. They actually are more likely to sort of have self-loathing and depression, not feeling good about themselves. There's no sort of sense of purpose. And then ironically they end up resenting the source of the income.

Klontz adds that parents often use money for their own psychological reasons. They want to feel important and maintain their connection to their children. They use money and dependence as a tool to do so. Parents want to be needed.

I have seen this in my own home in recent years, as my husband and I have co-parented two children through their teens and now in their early twenties. We have interrupted vacations to help a child respond to a jury duty notice just before a deadline (call the number on the letter!) and have put off our own work to fill prescriptions and mail them to school rather than push a child to manage their own health care. We pay phone bills, give them an honor policy on charging things to our credit cards, and, yes, stretch ourselves financially to pay for their tuition so they will not have student debt.

Despite all the book knowledge I have as a CFP® and a longtime business journalist, I have realized that raising these kids to be financial grownups has been a lot harder than I ever imagined. My husband and I have discussions and make plans, but we don't always agree. Actually executing a plan has often proved impossible. Teaching a young child to put money in three jars labeled Save, Spend, and Give, as popularized by Ron Lieber in The Opposite of Spoiled (HarperCollins, 2015), is less complicated than teaching an adult child how to manage their life as a financial grownup. It may be a priority for us, but that doesn't mean they feel the same way. The relationship between the adult child and their parent is so different. There is a ton of psychology and relationship nuances involved on all sides.

Reality check: when my stepdaughter came to me to help with her 401(k) at her first job, she was on her way out the door to meet friends. I had nagged her enough that she had finally caved and set it up. She thought she was done because, as I instructed her, she had put in at least enough to get her full company match. She just wanted me to sign off and say, “Great job!” She was already annoyed at me that her paycheck would be reduced by so much. But the money wasn't invested in anything, and she was about to walk out and didn't seem to care. So I was left with a real parenting dilemma. Do I:

Say, “OK bye!” and let her deal with the consequence of the money not being invested – indefinitely?

Say, “This isn't invested,” explain that she needed to choose an investment, and try to walk her though the choices despite eye rolls and her insistence that she needs to leave?

Say, “Bye!” and then just put her money into a low-cost index fund without telling her and plan to circle back later on to explain – which may never happen?

In the end I got her to sit briefly. If we are being honest, though, she still didn't see the difference between a fixed-income fund and a stock market index exchange–traded fund offered by the same company, almost checked the wrong box, and then didn't stay for the explanation after I fixed it. I “saved” her from not having her 401(k) invested but failed to actually teach her anything about investing at that time. I vowed to look for a time to circle back. But this example shows that even with all the knowledge and best intentions, it is complicated.

My podcast business partner and former Money with Friends cohost Joe Saul-Sehy has reminded me that his parents cut him off financially when he was 18. Although the lessons he learned in a few rocky years were really tough, he eventually found his way. The truth is that in previous generations that was likely more common. Saul-Sehy has been more financially supportive with his own kids, who are now in their twenties. Thanks to his discipline and teaching, they are both in strong financial positions for their age, making adult financial decisions for themselves. One even owns a rental property that he is managing.

Frankly, though, many of us Gen Xers, and to a large extent also Boomer parents, love to hover and “help.” Many of us have gone from being just helicopter parents to snowplow parents, moving obstacles out of the way to clear the path and make life easier for our offspring. Concierge parenting, where we parents are standing by, on alert to solve problems, often by throwing money at them, is now emerging.

Realistically, chopping off support right after graduation isn't a plan most of us will stick to. So a surprising compromise may be the answer. On the surface, telling a kid to live at home until they can afford to live independently makes sense. Based on recent data, however, that strategy can backfire and can lead to lower occupational status. The concept: having kids live in their childhood home, with their parents taking care of them, keeps them in that life stage.

It seems counterintuitive, but the research actually supports the idea that having a child live independently, even if it means financially subsidizing that young adult's “independent” life leads to better career outcomes. The theory is that they are getting used to the daily rituals of financially independent living. Even if they are not paying 100 percent of the financial costs, they are starting to understand all the different money-related variables of life as a financial grownup. Parents can set up a gradual schedule to scale back on the support.

In my case, after living at home for about six months following college graduation and getting a few months of working at a real adult job under my belt, my parents helped me move into a brief rental and then buy my first apartment in my early twenties. I was so fortunate that I had a backstop, but the reality is that almost all my take-home pay went to housing costs and other fixed expenses. Sharing a 99-cent box of mac and cheese with a close friend most nights quickly made me aware of the costs of adult life. I pushed for promotions at work. I left for a better paying job. I watched my money very closely. I'm not sure I would have been as tuned in if I lived at home, with food always in the refrigerator and my laundry done each week.

Of course, this is not always financially viable for parents. Spouses may disagree, and every young adult is different in terms of their personality, readiness, and maturity. The key is that there has to be a phasing out of the financial support. We will get to that later in the book.

My work focuses on the money stories that drive us to find a path through the different life stages of growing up. But the focus had always been on the person doing the growing up. What I have not fully explored – and frankly solved for – is the role older generations, the parents and grandparents, need to play in the process.

Launching Financial Grownups is a call to action for parents of young adults who want the best for their kids but are beginning to realize that their own financial independence and financial separation from their children must become a priority as well. This will be your practical guide for how best to raise children to become financially responsible, independent young adults in our rapidly changing, increasingly competitive economy so they can create their own grownup lives.

Notes

1

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https://mlaem.fs.ml.com/content/dam/ml/registration/ml_parentstudybrochure.pdf

2

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https://www.55places.com/blog/survey-reveals-empty-nesters-still-supporting-children-financially