LOOK­ING AT FI­NAN­CIAL HELP FROM PAR­ENTS

The Denver Post - - BUSINESS - ByMiri­amCross |

Nearly half of mil­len­ni­als still rely on their par­ents for help with day-to-day liv­ing ex­penses— in­clud­ing those­who are mar­ried or live with a sig­nif­i­cant other. When is it time to go it alone?

Liv­ing in­Wash­ing­ton, D.C., one of the most ex­pen­sive cities in the coun­try, means mak­ing some sac­ri­fices when you’re start­ing out. I sharemy apart­ment with a room­mate, take mass tran­sit in­stead of splurg­ing on cabs, and or­ga­nize potlucks in­stead of din­ner par­ties. But I’m happy to scrimp and save if it means I can sup­port­my­self— in­clud­ing pay­ingmy own rent, cell phone bill, health in­sur­ance and more.

I can thankmy par­ents for help­ing me get to this stage. They cov­eredmy univer­sity tu­ition, al­low­ing me to grad­u­ate with no debt. And they let me live at home rent-free for nearly two years af­ter grad­u­a­tion. Even now, my­mom still pays formy flights home a few times a year. I barely thought twice about their help un­til ear­lier this year, when I got the news that I would need some very ex­pen­sive den­tal­work, andmy mom­gen­er­ously of­fered to cover part of the cost. As much as Iwanted to ac­cept, I hes­i­tated. As a twen­tysome­thing adult with a full-time job— at Ki­plinger, no less, wherewemil­len­ni­als take our fi­nan­cial savvy se­ri­ously— shouldn’t I be able to foot the billmy­self?

I’m not alone in strug­gling with howto let go of parental sup­port inmy 20s. Many ofmy friends are on the fam­ily cell phone plan or en­joy all-ex­penses-paid va­ca­tions cour­tesy of their par­ents. A sur­vey from TD Bank found that 42 per­cent of 21- to 24-year-olds rely on their par­ents in some­way, es­pe­cially for rent, util­i­ties and day-to-day liv­ing ex­penses. And a sep­a­rate sur­vey fromUSA To­day and Bank of Amer­ica re­veals that 40 per­cent of mil­len­ni­als still re­ceive­money from their par­ents, in­clud­ing those who are mar­ried or live with a sig­nif­i­cant other.

Even if it’s scary to re­lin­quish your par­ents’ help, “it’s re­ally em­pow­er­ing to be fi­nan­cially in­de­pen­dent,” says PamCa­palad, a cer­ti­fied fi­nan­cial plan­ner and founder of Brunch& Bud­get, a fi­nan­cial-plan­ning firm serv­ing young adults. And tak­ing con­trol of your fi­nances nowwill make you bet­ter pre­pared for greater fi­nan­cial re­spon­si­bil­i­ties in your 30s, 40s and be­yond — es­pe­cially when your par­ents can’t, or shouldn’t, lend a hand fi­nan­cially. Think of th­ese years as your own “glide path” to­ward re­spon­si­bil­ity, says Jeff Rossi, a cer­ti­fied fi­nan­cial plan­ner and founder of Peak Wealth Ad­vi­sors.

So howdo you let go? It’s im­por­tant towean your­self off their help with small steps. Start by break­ing down your ex­penses into cat­e­gories, and an­a­lyze where the money is go­ing, sug­gests Ca­palad. Take a close look at cat­e­gories that seem high.

Then fo­cus on one cat­e­gory amonth to re­duce— not elim­i­nate— your spend­ing, such as din­ing or shop­ping. Re­di­rect those sav­ings to an­other, more es­sen­tial cat­e­gory. At the same time, find­ways to re­duce the cost of es­sen­tial liv­ing ex­penses, such as rent, food and util­i­ties. Down­grade your cell phone plan.

The­up­sideof con­tin­ued­sup­port

As you progress, don’t beat your­self up if you need to rely on your par­ents’ help (and you’re for­tu­nate enough to have par­ents in a po­si­tion to help you).

“The goal is al­ways to be fi­nan­cially in­de­pen­dent,” saysDanna Jacobs, a cer­ti­fied fi­nan­cial plan­ner and found­ing part­ner of Legacy CareWealth. “Some­times you need a lit­tle help along the­way.”

The bot­tom line: Use your par­ents’ help as an op­por­tu­nity to bol­ster your re­tire­ment sav­ings or emer­gency fund, to learn money man­age­ment skills or to fig­ure out your dream ca­reer with­out stress­ing about howyou’re go­ing to put food on the ta­ble— not as an op­por­tu­nity to be lazy.

Some­times it makes fi­nan­cial sense to re­main teth­ered to your par­ents, as long as you do so re­spon­si­bly. For ex­am­ple, stay­ing on the fam­ily cell phone plan or auto in­sur­ance pol­icy could be awin-win that re­sults in lower rates for ev­ery­body. (You gen­er­ally must still livewith your par­ents to be cov­ered by their auto pol­icy, and even then you­may be able to find bet­ter rates on your own.)

Be­com­ing an au­tho­rized user on your par­ents’ credit card is a great­way to build your credit his­tory be­fore you can qual­ify for your own card. Just re­mem­ber that if you don’t pay off your bal­ance each month, their credit rat­ing is on the line, too.

If you’re 26 or younger, you may find your par­ents’ health in­sur­ance pol­icy to be more com­pre­hen­sive and eco­nom­i­cal than one of­fered by your own­work­place. In th­ese cases, ask your par­ents what your share is— and that med­i­cal bills be redi­rected to your ad­dress — so you can pay your part and be­come fa­mil­iar with how­billing­works.

As for help­ing withmy den­tal­work? In the end, I ac­cepted. I could have paid for the pro­ce­dure onmy own if I’d re­ally had to. But her as­sis­tance gave me peace of mind, know­ing I still have a cush­ion of sav­ings.

MICHAELJUNG/FOTOLIA

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