How to financially launch into adulthood
Today’s post is from Brian at Debt Discipline, and was originally published on The Money Mix.
Have you heard the phrase Failure to Launch before? I'm sure you have, there was a $100 million-grossing movie, starring Matthew McConaughey and Sarah Jessica Parker of the same name. If you are a parent, you might be thinking about how it relates to your kids.
No parent wants their child to experience the failure to launch and end up living in their basement until they’re thirty-five. Failure to Launch is a common way to describe a young adult who is struggling with the transition to adulthood. It's often defined as an inability to leave home and support oneself.
One of the common reasons a young adult fails to launch is because of money. Lack of it or not knowing how to manage it. Many parents want to soften their child's entry into the real world, but at what cost? Do they work more, delay retirement, skimp on savings?
Parents want the best for their kids, but not by sacrificing their own futures. The phenomenon of failure to launch is so rampant that several treatment programs have been developed to help address it. I'm not sure if a costly program is needed unless you are genuinely dealing with a medical condition.
Let's breakdown some of the ways you can prevent the failure to launch syndrome from occurring.
Techniques to Overcome Failure to Launch
Finding PassionIt mind sound a bit cliche, but young adults need passion in their lives. In fact, we all need a bit of it. Passion combats failure to launch by letting us be participants rather than observers. Passion comes in all shapes and sizes and doesn't necessarily need to be your job. You may find passion in helping others, cooking, music, art, a particular career field, sports, chocolate, video games, movies, etc. The list is almost endless.
The key is to harness that passion and let it help drive and motivate you. As parents, we can be supportive of a child's passion. We need to reinforce the idea that life is not about "likes" on a social media platform, but about real, meaningful connections to people and activities.
If all else fails in discovering your passion, you might want to try the opposite, by listing all the things you hate doing. By systemically eliminating these things from your life, you will be left with only the things you enjoy doing. This is an excellent exercise for someone struggling to find their passion.
Financial LiteracyLet's face it. We use money in all of our lives. But only 1/3 of states require their students to graduate having taken a personal finance class. Formal education is just one way we increase our knowledge. A lot is learned from family and friends too.
Failure to launch into what has recently been coined "emerging adulthood" has a lot to do with money. Children learn by example, so it essential to be a good one and involve them in money discussions. Money shouldn't be a taboo topic. If you're bad with money, how do you think your children are going to handle it?
Sure there are exceptions, but most will fail too. Financial literacy needs to start with you. There are plenty of books, blogs, and podcast to help you increase your financial IQ if you need help. In turn, you can better prepare your kids. Involve them in age-appropriate topics. If you ever want a captive audience, talk to them about smartphones. They are always interested in getting the latest and greatest model.
Teach Them About CostsYou can explain the cost of a new device, your choices for paying for it (in full or payment plan), the reoccurring charges each month, and how many hours someone would have to work to covers these costs you've just successfully navigated a money conversation with your child.
Taking a money discussion further, does your child know how much you make? What your rent or mortgage costs? Discussing these real-life examples helps them better understand money and what things cost and how to pay for them.
As a teenager, with a part-time job and driving a car are two great opportunities for preparing them for their financial futures, and avoiding failure to launch. Review their paycheck and taxes. Give them the challenge to save, spend, and give a portion of their income. A car is another teachable money moment. The overall cost to own, maintain, insurance, and gas it to keep it running.
These examples are all thing adults handle regularly, but as pre-adults, we probably don't care about them at all. That was one of the benefits of being a kid, no adult responsibilities. But if these details are always hidden and never discussed, how would we ever be able to handle them when presented?
Avoiding DebtDebt is a four letter word for a reason. Starting your financial life with debt is an apparent reason why emerging adults fail to launch into financial adulthood. Debt causes stress. Debt causes fear. It causes fights. Being in debt limits your options.
Would any of us want to have these restrictions in our lives? Now consider your young adult trying to balance these with a new job and social life it could be overwhelming. It's essential to stay within your means while supporting your young adult. You do not want wat to sacrifice your financial future or lifestyle by taking on debt for someone else, even your children.
One of the biggest drivers of debt for young adults is student loans. As of 2018, 69% of College students took out student loans, and they graduated with an average debt of $29,800. Ouch! That's a significant number looming over anyone head.
A college degree doesn't have to be a debt death sentence. A degree can be obtained with little or no debt if you get creative.
A Side Note: Some of you reading this may already be deep into debt. There are resources available to help. You must be careful of debt consolidation services and the like. You need to know what you're getting into; and that it will benefit you, not the company allegedly trying to help.
College without debt
Here are five ways to get through school without student loans (or minimal debt):
1. Make the most out of High SchoolHigh school offers several ways to get a headstart on your college degree. Advanced Placement (AP) are college-level classes you can take in high school and earn future college credit for completing. Most colleges will accept these classes and credits if you score a three or above on AP final exam. This is an excellent way to earn college credit in high school at the cost of an AP exam. High Schools often offer college-level classes through a partnership with a community college or a local University. These classes allow high school students to earn college credits at a reduced rate. CLEP (the College-Level Examination Program) is another way for students to earn college credits inexpensively. CLEP offers 33 exams that cover intro-level college course material. With a passing score on one CLEP exam, you could earn three or more college credits.
2. Understand the ROI of your degreeWhat's the income and job opportunity in your field when you graduate. Don't borrow $160K for a degree that has the income earning power of $40k per year. You don't have to kill your dream, and can still follow your passion but find colleges that are cheap to attend.
3. Stay local
Community College is an affordable option and a springboard to larger Universities. Attending a community college for the first two years of college life save a ton of money. Many community colleges act as feeder schools for four-year universities.
4. WorkYou are going to need to work during college to avoid debt later. A part-time job during the semester help keep sending money in your pocket. A full-time summer job allows you to save for expenses like books and materials. Check with your employer to see if they offer student loan assistance too, many do.
5. Become a Resident Assistant (RA)Becoming an RA has its benefits when living on campus. Many colleges offer free room and board if you become an RA. Your responsibilities as an RA will vary, but often an RA helps enforce the rules and policies of residence life, housing and dining services, and the University. Taking on these responsibilities can save you thousands of dollars a semester.
Now student loan debt is only one form of debt someone may encounter. Car loans and credit cards are typical debts too. The idea is the same with those debts. You want to minimize and avoid altogether if possible. Just follow the general rule of living within your means and using cash.
Tough LoveIf all of your parenting and coaching fails to help your young adult launch, more drastic measures may be needed to push them toward independence. Tough love is often the category this type of parenting falls into. Tough love's end game is ultimately the person's welfare. If a child is unable to launch, you may need to enforce stricter boundaries. If they fail to take responsibility for their actions, a clear consequence must occur.
It's painful to watch someone you care for fail and have to face the consequences, but sometimes it the jolt of reality they need. Enforcing a curfew, deadlines, schedule, etc. may be the structure they need to be successful. You do not want to continue to enable someone who is facing a failure to launch.
Pitching InAlthough we want our children to move out, live on their own, and be successful, there could be some benefit for their extended stay at home. Set clear expectations, like pitching in with house chores, including cleaning and cooking. This work helps build some skills they will need on their own.
Consider charging them rent. It's another one of those items they will need to handle on their own someday. It's money that you can choose to save for them, so they have a cushion when they finally launch. It could be about spending some extra quality time with your child. Having them living at home gives you the undivided opportunity of their time. Once they are out of the house, they may not always be available. This time might help you develop a deeper relationship.
Have an Exit StrategyIn any of these steps of overcoming a failure to launch, you need to have clear communication with your child. They need to understand how long or how much support you are will to give. Setting these clear expectations helps them plan for their exit. It doesn't mean that once they move on that emotional or moral support will stop. You might stay on as their financial accountability partner to help guide them with their money. You may offer resources like books or articles they could read to increase their knowledge on a particular topic.
The key is to have them understand that even though your monetary support has ended, you are always available for a talk or questions. This might be the safety net they need to launch successfully. As parents, we should fulfill our parental responsibility. We need to teach our kids to function independently and raise a person who contributes to society. It doesn't mean we need to support them financially forever.
Final WordWe all want to live a balanced life. As a parent, we often experience peaks and valleys in our own life. Many factors can contribute to what can feel like a roller coaster ride; things like our work, health, loss, and stress are just a few. As our children grow and experience these things for themselves, we need to help guide them, and let our own experiences act as an example. They will experience speed bumps along the way, and it's our job to help smooth them out, but eventually, they need to navigate on their own.
The post was expertly crafted for and originally appeared on The Money Mix and was written by Brian from Debt Discipline.