Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
With the cost of college rising and the economy still hindering young graduates’ ability to stay afloat, more parents are raiding their retirement and savings to help their kids pay for life on their own.
National financial planning firm Ameriprise Financial asked more than 1,000 baby boomers if they provided some level of financial support to their adult children and 93 percent said they are helping out in some way. That number hasn’t been significantly impacted by the recession, either—in a similar survey conducted in 2007, 92 percent of baby boomers said they helped their adult children.
What has changed, however, is how this financial aid is impacting the parents themselves. In the same survey, only 24 percent of those parents said they were putting away money for their own future. That number is down 44 percent from the 2007 survey.
This means that while parents have been financing their adult children for some time, they are increasingly doing so at the expense of their own financial comfort, said Cathy Pareto, a Miami-based Certified Financial Planner.
Pareto has worked with clients for more than 15 years and sees this scenario play out time and again. Recently, she said, she met with a father who had successfully secured his retirement when his son asked for help with medical school.
“He told me, ‘I feel like I should be helping him, and he doesn’t want to get these really high-cost loans, and I’m feeling some pressure from my wife, so what do I do?’” Pareto said. “They had just enough for their retirement, and they didn’t have enough to help pay for their son’s second education.”
How parents help their adult children financially—and when to stop
Parents are helping their children with their education, car payments, car insurance, and bills. They are and even helping their children buy homes and allowing them to move back into their homes rent-free.
On average, parents have given their young-adult children (ages 19 to 22) about $7,500 a year, according to a new study by the University of Michigan for the MacArthur Network on Transitions to Adulthood, which conducted 2,098 interviews between 2005 and 2009.
That $7,500 a year won’t even come close to paying the cost of tuition. Annually, college costs an average of $17,131 a year for an in-state four-year public school and $38,589 annually for a private-college education, according to the College Board.
Plus, the rate of increases in college tuition far outpaces the rate of inflation, leaving many parents who help their kids with college strapped for cash, even if they did start saving early.
When thinking about helping your adult children, Pareto suggests the same she told her client whose son needed help with medical school—at some point, you have to say no.
“You probably feel compelled to give your kids everything you can—maybe more than you can —because you’re their parent,” Pareto said. “But honestly speaking, at some point you’re doing a disservice to yourself. You’re putting your own security at risk. So what kind of values are you really showing your child?”
Instead of meeting the demanding price of college or relenting whenever the kids request money, parents need to instead determine what they can comfortably spend on their child’s education or what help they can offer with costs like rent or car payments, if any.
In lieu of giving your kids cash, give them some of that hard-earned life knowledge. Help them learn how to read their credit report and credit score, figure out where their income will come from, whether it’s scholarships, loans, or jobs, and what their bills will be. They have to figure it out sometime—the earlier the better—so you can enjoy your retirement when they’re gone.
Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and at the Home Equity blog for CBS MoneyWatch.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.