These days, parents aren’t worried about empty nest syndrome. Many ‘kids’ come back to live with their parents after college, while in their late twenties, and beyond. The Boomerang Generation needs to lean on mom and dad due to the wake of the recession. It has an emotional impact on the kids but financially affects parents. When the kids come back, you’ll need to find ways to stretch your dollars.
Some parents are more optimistic, hoping their child’s return is momentary. In bad scenarios, however, a boomerang kid could live with their parents for years, which chips away at a parent’s ability to save, all the more reason to start saving today. Review several options and schedule a meeting with a financial counselor. Depending on your situation, you may want to make very conservative or more daring money moves.
Invest in a 401k
Investing in a 401 is smart because it involves pre-tax funds. Technically, you can place more money towards saving since you would not see that money otherwise. Even better, some employees have employers match the 401k donation. Since those who prematurely draft the funds get penalized, it’s best to use this as a retirement fund rather than a last-minute place to find extra funds to aid a boomerang child.
Have Them Share Costs
If your kid is immediately bankrupt, there is little they can do to help out. Therefore, they should do other things to compensate, such as clean the home and do household chores for the family. Otherwise, tell them they need to get a part time job, regardless of their future career aspirations, to help fund the added costs of the household. Some parents feel sorry for kids in a bad predicament, but it’s more helpful to focus on doing things that will build their confidence as well as help them make money.
Work on Your Own Vehicle
Next only to your home, the automobile is the household’s biggest expense. It pays to maintain your car and helps save if you know how to change your oil and address minor repairs. In the very least, a car manual will help you understand your vehicle. Get your hands on a Mercedes auto manual or other vehicle resources that provide you with the mechanical knowledge to save. Start learning your own vehicle and understanding the costs related to repairs and labor.
Stop the Spending
In addition to saving, the household needs to stop the superfluous spending, which may include going out to eat, making impulse purchases, or taking yearly vacations. Additionally, start clipping coupons, joining buyer’s clubs, and only buying what’s needed and preferably when such items are on sale. Also, stop paying interest on used credit cards. Be sure to pay off the principal amount each month.
Prolong Social Security
Some elders are set on receiving social security funds at a certain age when they retire. As suggested by the presence of your adult child, things change. So, rather than plan on collecting, start estimating to receive the funds later. Deferring the money will increase the number of received funds in the future. Of course, you’ll likely need to supplement this decision with postponing retirement or getting a part-time job to compensate for the lack of social security funds. You don’t want to start pulling from your savings!
Have Them Stay Longer
The ideal situation features a happy, grown child who is financially stable and out of the home. What causes the boomerang effect, however, is financial instability which occurs when the child moves out too early. Even when it seems they are back on their feet with a full-time job, have them stay in the home longer, placing money in a savings account versus going out with friends, going on dates, etc. It may be uncomfortable now but a longer stay ensures they won’t have to return later, despite another future layoff, etc.
No Personal Loans
It’s no surprise that moving back to one’s home is emotionally devastating. And an adult child will do much to avoid the situation, such as ask for a personal loan so they maintain their present apartment or home. Don’t give in and provide personal loans, however, since it only enables an out of work or immature adult to stay in a bad situation versus doing something to improve it. In a more lenient scenario, you may strike a deal with them, stating you will provide them with added monthly funds if they get a part time job and show an effort to improve their own predicament.
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