Will you have to support your kids after they graduate from college?
As anyone who has a child in college knows, this is a scary time to be a twenty-something. A recent study by the Economic Policy Institute found that the unemployment rate for young college grads is still 7.2% (it was 5.5% in 2007) and the underemployment rate is almost 15% (9.6% in 2007). Underemployment could mean working at a job below your skill level or working part-time because full-time positions aren't available.
Does that mean your college grad is on the fast track to move back home?
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
As much as my wife and I would love to have a full nest again, I don't think it's generally a good long-term solution—for anybody. With so many parents' retirement plans under pressure already, the impact of supporting an adult child for a long period of time could be burdensome. On the young adult's side, relying on parents for too long can lead to a case of arrested development.
Here's how we're thinking about the issue—and how we're encouraging our daughter Abby, who just finished her sophomore year of college, to navigate the growing-up process. It's important for us as parents to guide her, but to ultimately give her the freedom and responsibility for making her own decisions.
Your College Major Matters
A big consideration that can help ease potential financial stress is your child's major. After all, your child's field of study can have a major impact on their employability and income after graduation.
A Georgetown University study found that non-technical majors, such as the arts, humanities and social sciences, have higher unemployment rates than those related to computers and math. However, there's also a difference between majors that teach students to use technology (such as Management of Information Systems) versus those who invent technology (such as Computer Science). "Inventing" majors tend to have lower unemployment rates, according to the study.
That doesn't mean computer science is your only option. The researchers also found that the most stable job markets for recent grads were in healthcare and education. Business and engineering also had relatively low unemployment rates.
Of course, this isn't the only study on the subject, and the results tend to depend on the year and who you ask. Every year, Kiplinger shares their results for the best and worst college majors based on employment trends and salaries. Last year's top ten majors included Computer Science, Management of Information Systems and Software Engineering. The bottom ten majors included Interior Design, Graphic Design and Culinary Arts.
Look Beyond the Numbers
For all the data analysis, it's also important to keep in mind that a low unemployment rate and a high average salary still don't guarantee a well-paying job, a satisfying job or a job at all. So we took all this information and used it to help Abby think about what she enjoys and finds interesting—without losing track of the economic forces at work.
For each subject she took an interest in, we encouraged her to explore the possible career paths involved and think about the question, "What can I really do with this major?" It was a process that involved her college adviser and research on our own.
These are conversations and thought processes that I strongly encourage you to have, too.I know that these kinds of issues can seem a bit cold for some parents—a lot of us have memories of college being a time of personal and intellectual growth, not just a point on a pre-defined career path.
That's why it was really important to me that Abby (and eventually my son Clay) pick a subject that she finds fascinating and hopefully satisfying, one that can open doors for her in the future instead of limiting her options. In the end, Abby declared Business Management as her major—and I fully support her choice.
Also, speaking as a parent who is spending a tremendous amount of money to provide an education for my kids, I want to make sure that it's helping to prepare them for a future in which they can build their own independent and happy lives. In our case, this is just a matter of ideals, since we're footing the bill. But for the numerous college students who are taking loans or paying their own bills, it's also a matter of necessity. At the end of the day, you don't want your child to have borrowed their way through a $200,000 education only to get a $25,000-a-year job at the end of it.
So, while it can feel a little bit calculating for some, and while it can be hard to get the kids to listen for others, this is one subject that I think we can all agree on in the end: Helping our children choose a major that reduces their odds of having to move back home for an extended time is a win-win for everyone involved.
Bradford Pine is a wealth adviser and president of the Garden City, NY-based Bradford Pine Wealth Group. He assists individuals to create wealth, simplify their lives and plan for retirement.
Anna B. Wroblewska contributed to this article.
-
SRI Redefined: Going Beyond Socially Responsible InvestingNow that climate change has progressed to a changed climate, sustainable investing needs to evolve to address new demands of resilience and innovation.
-
Here's When a Lack of Credit Card Debt Can Cause You ProblemsUsually, getting a new credit card can be difficult if you have too much card debt, but this bank customer ran into an issue because he had no debt at all.
-
Here's When a Lack of Credit Card Debt Can Cause You Problems
Usually, getting a new credit card can be difficult if you have too much card debt, but this bank customer ran into an issue because he had no debt at all.
-
Going to College? How to Navigate the Financial PlanningCollege decisions this year seem even more complex than usual, including determining whether a school is a 'financial fit.' Here's how to find your way.
-
Charitable Giving Lessons From Netflix's 'Apple Cider Vinegar'Charity fraud is rife, and a Netflix series provides a timely warning about donating money to a good cause without looking into its background.
-
Four Takeaways From Filing Your Taxes to Boost Your Financial FutureNow that another tax season is in the rearview mirror for most of us, what lessons can you take from what you learned about your finances to plan for the future?
-
What Claims Adjusters Are Thinking vs What They're SayingAfter a natural disaster, few of us are at our best, but here's what to keep in mind when you're interacting with your insurance company's claims adjuster.
-
Looking to Make a Job Change? How to Stand Out Like a ProTo make a strong first impression in interviews or when networking, skip your job title and work history and use an opening gambit that highlights your talents.
-
First 100 Days: Trump's Impact on Your FinancesHere are some opportunities to consider regarding investing, interest rates and tax cuts as the financial landscape shifts under the new administration.
-
Children Can't Afford to Fly the Nest? Here's How to HelpThe high cost of living means more adult children are staying at home. Here are four ways to help financially so they can eventually spread their wings.
