House rules for new graduates, by Suze Orman

If you have a newly minted college graduate in the family, I want to say: Congratulations! That is a tremendous accomplishment. For them, and for you. Yes, I know it is a tough job market for young adults right now. But I hope your family will take a beat and celebrate what has been accomplished, before the graduate gets to the hard work of finding work.

And as a parent or grandparent, I want you to be smart about how you help.

What you’ll learn

• No stipend unless your finances are in great shape
• Your financial help is for needs, not wants
• Charge rent

No stipend unless your finances are in great shape

Giving a new grad a few hundred dollars a month to put toward rent is only allowed if you have no credit card debt, have a fully funded emergency savings plan, and are on target with your retirement savings. Don’t you dare tell me (or yourself) that a few hundred dollars a month isn’t a big deal. It is very much a big deal if you are within 10 or so years of retirement and aren’t truly financially secure. As for grandparents, it’s great if you can honestly afford to help. And that means having planned for a future where you may need some help around the home.

Your financial help is for needs, not wants

If your child is eager to have their own place—and you are eager for that too!—and you can afford to help, I hope you will impose a need vs. want frame on your contribution.

It is not your job to help them afford a fantastic place in their favorite neighborhood, especially if they can spend 10%, 20%, or 30% less by moving into a shared apartment that is in a less “hot” area. I am not suggesting they consider less-safe neighborhoods. But I am insisting that you have a clear-eyed conversation that you are not the bank to make their wishes come true. Your help is conditioned on them becoming financially responsible adults. And that starts with them spending as little as possible on rent for a place that meets their needs.

Charge rent

For a child moving back home, you are not to run a hotel. I am fine if you want to let them just plop down for a month or two and catch their breath. But if they continue to live at home beyond that, it’s time for them to contribute to the household.

Looking for work is not a full-time job. Encourage them to get some part-time work just to get out of the house and have some structure. Or impose some structure: spell out all the household chores (shopping for groceries, doing the laundry, cooking, etc.) that they will now take off your hands in return for free room and board. Don’t cringe that this sounds like punishment. It is anything but. At a time when they may be feeling vulnerable and frustrated as they look for work, it can be important to find ways to contribute and participate meaningfully.

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