Skip to main content

Parents Play Favorites When Helping Adult Kids Out

Image
By
I saw an interesting article in the US Today about how and how much parents help their young adult children. There's some interesting financial planning implications found in the article. Perhaps what was most interesting is that children of parents who pay for all college expenses engage in the most 'risk behaviors.' Doesn't hurt and may actually help to have some skin in the game.

Full article is below.
Best Regards,

Kevin Kroskey
----------------
Parents Play Favorites When Helping Adult Kids Out

SAN FRANCISCO – More than 60% of today's young adults have received financial help from their parents — and those described as having more agreeable personalities as children get more money than others, finds a study to be presented today at a meeting of the Population Association of America.Among the 62% of young adults getting parents' help, the average amount was $12,185, says lead author Patrick Wightman of the University of Michigan-Ann Arbor.

About 42% of parents help adult children pay their bills, 35% help with college tuition, 23% help with vehicle expenses, and 22% help with rent away from home, researchers found.

MORE: More Boomers help their kids survive the tough economy

Children who parents said were cheerful, self-reliant and got along well with others before age 12 were more likely to receive financial gifts or loans as young adults, Wightman says. And in families with more than one child, "if they perceive one of those kids to have a better attitude or to be more self-reliant, that kid has higher odds of receiving this type of support," he says.

The analysis is based on more than 2,000 interviews with 1,368 people ages 19-22 and their parents in 2005, 2007 and 2009.  The research found that 82% of higher-income parents ($99,910 or more a year) provide help, vs. 47% of those with lower incomes (less than $37,274). Yet lower-income parents provided as great a share of their incomes overall — about 10%.

A study in the current issue of the Journal of Adult Development found similar percentages of students getting parents' assistance — about two-thirds of 402 undergraduate students ages 18-27 at four U.S.campuses.

That research, co-written by Larry Nelson, an associate professor of family life at Brigham Young University in Provo, Utah, found that when parents covered everything, "their children worked the fewest hours and were engaged in the greatest number of risk behaviors," defined as drinking, binge drinking, smoking and marijuana use.

Young adults without financial support from parents "were working the highest number of hours just trying to make money and survive. They weren't engaged in risk behaviors."

However, Nelson cautions they also are at risk — of dropping out of school. "They burn out. They don't finish school and have lower starting salaries."

By Sharon Jayson; USA TODAY



Popular posts from this blog

Diversification: Disciplinarian of Disciplinarians

By
Disciplined diversification works when you do and even when you don't want it to. Diversification in effect forces you to sell the thing that has been doing so well in your portfolio and to buy the thing that hasn't. While this makes rational sense, it is emotionally difficult to execute. Think back to the tail end of 2008--were you selling bonds and cash to buy stocks? Most likely you weren't unless your advisor or some sort of automatic trigger did it for you. Carl Richards of www.behaviorgap.com provided a good reminder of how diversification works in a recent NY Times blog post. The diversification he discusses here is more so related to equity asset-class diversification but also touches on the three basic building blocks--equities, bonds, and cash. He doesn't discuss alternative asset classes -- an asset class that doesn't fit neatly into the three basic categories -- being used to further diversification, but that's a detailed topic for another day. ...
Read more

2013 Key Tax Proposals

By
On February 13, President Obama's Fiscal Year 2013 budget was released. Follow this link to get a full copy of the   2013 Budget . The   Treasury's Green Book   containing general explanations of the Administration's revenue proposals can be found here. Robert Keebler, a leading professional in the area of tax and estate planning, highlighted some of the key proposals potentially affecting taxpayers below: Extend Bush tax cuts for all but the top two brackets. The only change would be to have the 33% and 35% rates go back to their pre-2001 levels of 36% and 39.6%. Taxpayers in the top two marginal brackets would still benefit from reduced rates on the portion of their income taxed in the lower brackets. Raise the long-term capital gains rate to 20% for single taxpayers making more than $200,000 per year, $250,000 for married taxpayers filing jointly and $125,000 for married taxpayers filing separately. Tax rate on qualified dividends would revert to ordinary income t...
Read more

Should We Go Back on the Gold Standard?

By
If you watched the Republican presidential debates, you might have noticed that a number of  candidates yearn for a return to the gold standard—that is, that every dollar issued by the government would be backed by a comparable value in gold bars that were stashed away in a government vault. Sen. Ted Cruz of Texas argued that the dollar should have a fixed value in gold, and Sen. Rand Paul of Kentucky added that printing money without backing in the precious metal destroys the value of our currency. Mike Huckabee, former governor of Arkansas, thinks that if not gold, then the dollar could be pegged to a basket of commodities. All are mostly concerned that printing money will cause runaway inflation.   But there may be several problems with this return to the fiscal system of the late 1800s and early 1900s. One is that inflation has barely budged even as the Federal Reserve Board was piling one QE stimulus on top of another, and the government was adding records amoun...
Read more