When the economic tsunami of 2007-2008 hit, no individual group or age cohort was spared. For the new generation of Capital Region college grads, the millennials–those born between 1980 and 2000–are going to impact and shape the economy in a profound way as they move into their prime earning years.
Think of all the events that have happened in the millennials’ lifetime: the Reagan revolution, the fall of the Berlin Wall, the Clinton years, 9/11, wars in the Middle East, the economic meltdown of 2007-2008, Obama and Obamacare.
This vital group has, like their baby boomer parents and senior grandparents, obstacles to overcome.
Did you know that today’s 25 to 29-year-old owes more than $35,000 — and only 40 per cent of that is made up of student loans? Between credit card balances, car loans and other debts, 78 per cent of millennials with debt reported that they feel overextended (Bloomberg News).
Here are some tips to help new grads cope.
- Offer advice, not cash. It’s tempting to provide cash to solve your child’s money problems, but a bailout does not teach fiscal responsibility. Instead, offer to review your child’s expenses and help find ways to free up cash for debt payment. Instead, offer to review your child’s expenses and help find ways to free up cash for debt payments.
- Help them deal with the plastic. Adults in their 20s often pay higher credit card rates of 22 per cent or more owing to shorter credit history and low credit score.
- Suggest your child call the card issuer and ask for a lower rate pointing out a history of on-time payments (if true).
- With burden of student loans and stagnant wages, it may take time for young married couples to save for a down payment for a home or a car. Share your experiences in light of changed circumstances in the new economy.
- If your children need to move back home to cut expenses, discuss openly their contributions to the home’s budget. Rent, sharing of chores, contributions to the food budget are among items that should be negotiated up front.
Offer help — with caution. Financial help between parents and children carries loads of emotions on both sides. Helping your children doesn’t give you permission to interfere in their lives, and don’t be surprised when they don’t offer up the gratitude you’d expect.
Dave Balog teaches financial essentials to Capital Region families. email@example.com. 952-1257.