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It’s big news: Prince Harry and Meghan Markle are distancing themselves from the royal family, spending part of the year in North America and seeking to become financially independent. Of course, their situation is unique, but their decision nonetheless can be relevant to many of us – in particular to parents and grown children who must deal with questions of money, expectations, autonomy and family dynamics.
While these issues may be stressful, they can be worked out if you and your family members are willing to communicate and can show empathy for each other. To cite just one example, if you have young adult children, be aware that this age cohort faces some serious financial challenges. For one thing, the average amount of student loan debt per borrower is more than $35,000 (as of 2018), according to the Federal Reserve and Experian.1 At the same time, housing is expensive and real wage growth has been stagnant. Taken together, these factors point to the difficulties that young people face in their efforts to become self-sufficient, financially independent adults.
About two-third of “millennials” – the youngest of whom are about 24 – say that parents should contribute to the cost of college and allow their adult children to move back into their home if they have financial difficulties, according to a recent survey from the Society of Actuaries. However, millennials apparently are willing to reciprocate: 80% of them say that adult children should help their parents financially if there is a need, the same survey showed.2
So, given the above facts and feelings, what practical moves can you make to help create a positive financial relationship with your grown children? For starters, if they are living with you, consider the following steps:
And whether or not your children live with you, think about these suggestions:
Thus far, we’ve only discussed financial considerations associated with your grown children and their informal relationship with you. But if there’s a family business involved, you’ll have a different set of concerns. Not only must you work with your grown children on the day-to-day aspects of running the business, but you’ll also need to do some succession planning. You may well need to consult with your tax and legal advisors to set up a succession plan that’s appropriate for your needs.
Ultimately, both you and your adult children want what’s best for each other. So, be patient, be resilient – and be prepared. Contact an Edward Jones financial advisor to learn more strategies for achieving intergenerational financial harmony.
1 Student Loan Debt: 2019 Statistics and Outlook (www.investopedia.com/student-loan-debt-2019-statistics-any-outlook-4772007
2 Society of Actuaries: “ Financial Perspectives on Aging and Retirement Across the Generations” (https://www.soa.org/resources/research-reports/2018/financial-perspectives-aging-retirement/)
3 National Institute on Retirement Security: “New Research Finds 95 Percent of Millennials Not Saving Adequately for Retirement” (https://www.nirsonline.org/2018/02/new-research-finds-95-percent-of-millennials-not-saving-adequately-for-retirement/