An article in yesterday’s Wall Street Journal spotlighted 20-somethings — including one 28-year-old attorney — who are still on their parents’ cell phone plans and Netflix accounts.
At least through my mid-twenties, I got the impression most of my peers still received some kind of financial help from the bank of mom and dad – whether it was something relatively small like a mobile family plan – or something bigger like car or health insurance. This was true even after many of them were working, some in well-paying jobs.
And in well-heeled circles, it’s not uncommon to hear of parents making major contributions to their adult kids’ financial foundations, like helping with the down payment on a home.
Personally, I’m indebted to my parents for all they sacrificed to ensure I graduated from college with far less student loan debt than lots of students take out. I also lived at home for a number of months in my early twenties while I got on my feet. (In hindsight, staying with them longer would’ve drastically helped my financial situation, but my own desire for independence led me to move out quickly.)
But not everybody has parental support. Lots of people put themselves through college never mind expect parental support after graduation. Some parents aren’t in the picture, others can’t afford it, and some choose to cut off adult kids in an effort to force them to make it on their own.
I see both sides.
It’s getting harder and harder for a new graduate to immediately get a job and turn a few thousand in savings into a place to live, a car to drive, and all the other necessities to establish adult life. Impossible? No. But difficult. Assuming you can land the job, you’ll still need to have some savings and/or good credit to get started.
And then there’s health insurance. Obamacare now requires health insurance companies to let adult children stay on their parents’ policies until they turn 26. Because health insurance is such a critical part of being financially secure, I don’t see any reason for a 20-something to go without health insurance if they are under 26 and have parents willing to keep them on a family policy (even if it means you chip in towards the premiums.)
On the other hand, I learned some difficult financial lessons on my own that I might not have if I simply borrowed from the bank of mom and dad anytime money got tight. In the short run, turning to parents for money might stave off some overdraft fees or credit card interest. But if parental support delays you from learning how to budget, manage credit, and invest, it might do more harm than good.
What do you think? How much financial assistance do/did your parents provides during your twenties? Do you think it’s appropriate? If not, when should 20-somethings be “cut off”?