Moving Towards Financial Independence
FOR IMMEDIATE RELEASE
August 20, 2013
Do you have
a young adult living in your home? If
so, join the crowd. According to recent Pew Survey analysis of Census Bureau
data, "In 2012, 36% of the nation's young adults ages 18 to 31—the so-called
Millennial generation—were living in their parents' home." Multi-generational
households are common today for a variety of reasons, including unemployment,
increased college attendance (and student loan debt), and a delay in marriage
age. I think most parents look forward
to the day that their children are financially independent, but in today's
economy it's not easily achieved. However, financial independence is more
easily reached when young adults have a chance to practice positive financial
back-to-school season and now's a timely moment to talk to your young adult
about money. Whether your child is heading off to college, living at home, or
has moved out recently, consider helping your young adult develop a spending
plan. The steps to creating a spending plan include:
- List all
all sources of anticipated income
together who will be responsible for paying which costs
- Develop a
monthly spending plan
- Check how
the spending plan is working and make revisions as needed
sit down with your young adult and make a list of all anticipated expenses.
Include expenses that you, the parent, plan to pay for as well as expenses your
young adult will be responsible for paying. Do your best to estimate costs.
have a list of expenses, talk about who will pay what. This is a good time for young
adults to understand all of the expenses related to independent living
including car and health insurance, car maintenance, clothing, food, and more.
While you may still be paying some of these expenses, young adults need to be
aware that these are expenses they will be paying in the not-too-distant
future. Now is the time to be clear about your expectations as well as to
What are the
sources of income for the young adult and when will the money be available? For
income comes in large payments (such as financial aid) and needs to be divided
up to be spent over the semester. Many people find it easier to manage this
type of income flow if a savings account is used. The savings account can hold
the large payment and monthly amounts can be transferred to a checking account
to take care of monthly expenses. This can help avoid running out of money
before the semester is over!
your student be receiving financial aid?
part of their financial aid package include work study?
you expect your student to work part-time during college?
working full-time are the work hours guaranteed or will they vary?
step is to build a monthly spending plan (budget). People have an easier time
managing their spending when it is clear how much money is available to spend
and what expenses are anticipated during a short-time period such as one month.
University of Illinois Extension Financial Wellness program offers several
budgeting tools (such as an Excel budget form) at
http://web.extension.illinois.edu/financialwellness/resources.cfm. Of course,
to know if the spending plan is working, your young adult will need to keep
track of where their money goes. This is a great habit to develop and especially
useful during times of transition! To track expenses, jot down spending once a
day or as money is spent – using a portable device such as a cell phone is an
easy way to do this.
It may be
that after a month or two, the spending plan will need to be adjusted. Perhaps
you forgot an expense category, or some costs are more than anticipated. If
needed, adjust the spending plan as soon as possible before too much spending
has occurred. When expenses are higher than anticipated in one category, then
spending in another area must be decreased or more money (income) must be
management takes practice, and will likely involve a few mistakes along the
way. But step-by-step we can help the young adults in our lives more forward to
Source: Kathy Sweedler, Extension Educator, Consumer Economics, email@example.com