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How to avoid raising a slacker millennial

My son is home from college for the summer and I’m delighted. But I wonder how I’ll feel if – like so many recent college grads – he comes home after earning his degree and stays (and stays) or requires ongoing financial support.

That may be the reason a new release from the Arizona Pathways to Life Success (APLUS) project, supported by the National Endowment for Financial Education, grabbed my interest. It’s a longitudinal study that has looked over the past eight years at more than 2,000 recent grads, capturing glimpses of their transition to adulthood. Among the headlines: More than half of the participants rely on their parents for financial support (that includes nearly half of those employed full-time). Additionally, these recent grads don’t seem to value the same things many of us did at their ages. Nearly three in 10 said marriage and having children wasn’t important. Almost two in 10 don’t value owning a home. And 16% — gulp – said living on their own is unimportant.

Joyce Serido of the University of Arizona, the principal investigator on the study, was careful to note that this should not necessarily be characterized as a Failure to Launch scenario a la the Matthew McConaghey flick.

“There are some practical and current life conditions that make sense for children to still be financially supported,” she notes. Staying on a parent’s health plan until age 26 as the Affordable Care Act allows, is one. Staying on a parent’s friends-and-family phone plan because it’s cheaper than buying your own is another. Watching parents and friends struggle through the recession also made an impact. “It’s not that students are lazy or unmotivated. They’re being strategic, they’re being aware,” Serido says. “They’re looking at the landscape and thinking, ‘How do I make it when things are unstable?’”

As one student interviewed for the study asked: “Why would I want to own a home of my own when I might get the job of my dreams across the country and then I can’t sell it?” It’s tough to argue with that.

Still, the job of a parent is to help a child move toward independence, financial and otherwise.  How best to do that with this generation of young adults? A few suggestions:

Involve kids in decisions made on their behalves.

Specifically, student loan decisions. Serido notes that some well-intentioned parents take care of everything where loans are concerned – the paperwork, the funding. “But when these students get out of college they have no clue what it means to actually have these loans in their names.”

Talk to your children about how much debt they’re taking on in total and how that will translate into a monthly payment upon graduation. If they balk, you want the opportunity to consider less expensive educational options at the outset rather than halfway through. As a general guideline, your kids shouldn’t be taking on more in total college debt than they expect to earn their first year out of school, says Financial Advisor Tim Maurer, director of personal finance for the BAM Alliance.

And note: If they’re deciding between becoming a journalist or a lawyer, borrow based on the former until you know for sure.

Help problem solve. 

One interesting finding from the study is that money — whether it’s earned or from family support — doesn’t solve the problems that young people are having. “It might make them feel better so that they don’t have to deal with any financial stress, but in our sample it wasn’t money that contributed to better financial behavior.”

Students employed full-time reported having almost as much trouble saving for the future or dealing with unexpected bills, for example, as those employed part-time and graduate students. There also weren’t great differences in students who tracked their expenses or stuck to a budget. What does seem to help is teaching your kids how to deal with the financial issues they’re facing. But, cautions Serido, “Don’t tell them what to do and don’t do it for them.” Ask them what they think and how they’re going about solving a problem. If they’re stuck, offer a “have you thought about doing it this way” nudge.  “This generation is close to their parents,” she notes.  Use that relationship to enforce how important and relevant finances are to their everyday lives.

Draw boundaries about how willing you are to help. 

There are many times, Maurer notes, that moving home for a while after college is the smart thing to do. “They can establish a nice emergency reserve, work on a down payment on a home,” he says.  It’s also a lifesaver if they’re struggling for employment.  That said, be very careful about how much you choose to contribute – and how you communicate those choices. “There should be a plan,” he says. “Parents should say, ‘We’re going to help, but…here’s when we’ll stop funding your auto insurance, your phone, etc. If parents bought the child a car, perhaps they should transfer the title [so that the child feels the weight of ownership].”  Then – and this is key – allow your kids to run into the circumstances themselves. “Once the framework is set, if it doesn’t play out, it’s not your fault, it’s their fault.  Allow the consequences to happen. Don’t shield them.”

Kelly Hultgren contributed to this report.