What is the right amount of support to give your adult kids?
That’s a question we think about a lot, and related to another topic we recently wrote about: how we have approached financial fairness with our own kids.
Let us know what family-related expenses are testing your financial plans, in the poll at the bottom of the post.
A majority of young adults in the U.S. live with their parents for the first time since the Great Depression
– Pew Research
Parents interviewed for a Money.com post reported their grocery budget went up 250%, from $400 per month to $1,000.
With two kids ages 19 and 24, we can relate to these statistics. I had expected our post-pandemic budget to drop more than it did. When I reviewed the numbers, financial support to our legally-adult kids was one culprit.
Our college kid finished spring semester at home, so our household food budget grew by 50%, from two to three people. Our older kid lived on her own, but we used a premium online grocery account in our name to make sure she was able to shelter-in-place and still get the necessities. We ultimately did switch the credit card on file to her account, but not before covering almost $1,500.
College costs are the biggest financial hurdle to date
Of course, the cost of groceries pales in comparison to the cost of college. You might have to choose between paying for college v. achieving FIRE. A four-year, private college degree can run over $300,000 which is enough to fund a universal basic income plan for yourself! Putting that money into a retirement account for our kids instead of the college degree could mean millions of dollars at their retirement age.
Our oldest got a full tuition scholarship and lived mostly at home while getting her college degree, so we didn’t have to make any choices there. But our youngest opted for private college, and while she got some money, her out-of-pocket expenses will add up to over $100,000 over the four years. We have co-signed on student loans to cover the out-of-pocket, and our intention is to pay off those loans for her if it doesn’t derail our own financial plans to do so. After all, you can borrow for education but not retirement!
Are you paying for your children’s college?
Starting out costs after college might still be a factor if your child doesn’t find a job right away
After college, our youngest intends (for right now at least) to live in the Midwest, near where she is currently going to school. Hopefully, she gets a job that enables her to rent or even buy her first place. But what if she doesn’t land a job right away? She has a work-study job right now, but the pay is minimal and not likely to contribute significant, if any, savings for after-college expenses.
Summer internships are where you can pull in the bigger dollars (I did an investment banking internship during one of my college summers that paid more than what my mom was even making). However, the pandemic slowed down this year’s summer internship hiring. Also slowing is full-time hiring of new and recent graduates. While our youngest has three more school years before entering the full-time market, who knows how strong the job market will be then?
Our oldest had been going down the entrepreneurial route, covering her day-to-day expenses with babysitting jobs while building her business. Then shelter in place abruptly ended both her high-touch, in-person business and babysitting gigs. We have the space in our NY apartment for her to live, but now that we’re in Florida, we don’t technically need the NY apartment anymore. We could sell it and pad our retirement account. But she is living there now, so effectively we’re still supporting her post-college.
How much help are you giving for the post-college launch?
Housing costs are a big part of starting out, but could also be considered a separate financial foundation
Our oldest recently got a job, so she could pay us rent or perhaps it makes more sense for her to save up and buy her own place. Maybe we could do a real estate deal together – we could contribute the down payment and she could cover the ongoing costs, and eventually we split the profits based our contributions. That might also be a formula for how to handle housing for our youngest if she stays in the Midwest, where we don’t already own any properties she can use as a crash pad.
Another idea that could work for our household in particular is going in on a house abroad. Our kids haven’t shown much interest in rental real estate, but our oldest is very interested in travel. She also speaks Spanish almost fluently which would be helpful if we wanted to find a base in Spain. I have already been sending her listings. Even while borders are closed, no harm in planting the seed!
Are you planning on helping your kids buy their first home? Would you do a real estate investment with your kids?
The average US wedding in 2019 cost almost $34,000
That $33,900 average cost was posted in CNBC and is almost what we put down on our NY apartment. Scott and I paid for our own wedding, and having the bride’s family cover wedding costs seems a bit behind the times.
That said, our youngest hasn’t stopped talking about her imagined wedding since she was practically a toddler. She even has a dress style picked out – seriously.
I imagine our oldest would elope if she gets married at all, so maybe we’ll save some money there. Regardless, our plan is to not offer a wedding budget, but to give a fat gift, should our portfolio cooperate.
Are you planning to pay for your kids’ weddings?
We haven’t even touched on the grandkids or elder care
So far we’ve been lucky that we have been able to help support our kids and still not derail our own financial plans, including a move to Florida and the start of FIRE Stage 2. Of course, we have punted on the college cost issue, and housing and wedding costs are still theoretical.
Part of our push into rental real estate is because we see it as a great vehicle for family wealth across many generations. We didn’t start out with a goal to support grandkids or great grandkids, but it’s certainly an added possibility. With the future of traditional jobs so uncertain, our real estate portfolio could be a universal basic income plan for our family.
In addition, with people living longer and longer, that means elder care becomes an issue for more and more families. We hope not to be boomerang parents to our kids, but you just never know. I have a good friend who is padding her multiple seven-figure retirement account by more just because of the elder care wildcard.
What family-related expenses are testing your financial plans?
We are Scott and Caroline, 50-somethings who spent the first 20+ years of our adult lives in New York City, working traditional careers and raising 2 kids. We left full-time work in our mid-40’s for location-independent, part-time consulting projects and real estate investing, in order to create a more flexible and travel-centric lifestyle. 
Financial independence and early retirement is not something we originally focused on, but over time realized it was possible. Our free report, 
Our kids all got free academic scholarship rides through college including room and board but we made it clear that if they didn’t we’d pay in-state public U tuition for a four year vocational degree. After that they were on their own. Also nobody was coming home to live with us. And they’ve all been off the payroll since college paying for their graduate engineering, education and medical doctor degrees without help from us. Private college was only an option if they paid all the extra costs. And don’t major in some useless liberal arts field where you can’t find a job. For weddings we offered each $10k and the first two took the money but had private ceremonies, no guests, not even parents. The third one isn’t married yet. None of this was to save money, we’ve got multiple millions, but because we wanted to raise successful mature adults, not to have little kids in their thirties. So far it seems to have worked. They will all get seven figure inheritances eventually, but they’ll be our age when they do so they can’t depend on that now.
Thanks for sharing your perspective. Sounds like your kids are fully launched!