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Offering advice to your adult kids? Weigh your knowledge first!

Some things never change.

When I was (much) younger, I was living with a boyfriend and trying to figure out where in the world I wanted to go next. Like most people my age, I saw the world as full of choices, and I was anxious to see how my own story would play out. But quite suddenly, all that was cut short by my well-meaning parents who surely wanted the best for me. They saw my living situation as shameful, and so they saw marriage as preferable. They insisted I marry Bob. It was what their parents would have done, and so they believed it was the right thing to do. 

Fast-forward a few years, and the wisdom of that parental guidance had lost its sheen. My marriage was far less than wonderful, I had two pre-schoolers, and I was facing divorce—as well as a heck of a lot of pain. It would be another two decades before my parents both confessed that they had steered me wrong. With the benefit of hindsight, they finally understood that had they not interfered, I might have moved on and walked a different path. 

I don’t blame them for their choice. It was a different time and a far different world than the one we live in today. What I can do is try to learn from the past and, hopefully, become a wiser woman by creating my own new perspective. Whenever I am tempted to force my ideas on my adult children, I remember what a wise woman once told me: “You can’t parent adult children. When they have a problem, stick to one of three answers: That’s nice, That’s too bad, or I can help pay for that.” She said that when we try to impose external solutions to internal problems, we become the problem—for our children and for ourselves.

I think she was on to something!

The idea that one generation may not have the answers for the next generation goes against what many of us were taught. But it’s time to admit that our advice may not serve their best interests. That’s especially true when it comes to money. If you doubt me, just consider these once basic financial rules of thumb and how they’ve changed:

  • Education debt is “good debt”
     
    When I went to college, education debt—including student loans—was an accepted part of becoming an adult. But back then, the cost of education was far different than it is today. According to the Wall Street Journal, college tuition has risen an incredible 1,375% since 1978—more than 4x the rate of inflation. Even more, the total amount of student loan debt is now over $1.5 trillion, with the average debt per person at $34,000. 
    Screen Shot 2019-09-18 at 1.31.00 PM.png If that level of debt necessarily led to a job that could support paying it off in a reasonable amount of time (or ever, actually), then perhaps it could be argued that such debt is “good debt.” That’s not typically true. Talk to any group of parents and you’ll hear stories of adult kids who are struggling post-college—and in too many cases, the older generation is still serving as the Bank of Mom and Dad to provide a financial cushion. Often, these well-meaning parents are putting their retirement at risk!

    The takeaway: If you have a child or grandchild who is considering taking on student loan debt, don’t assume they’re taking on “good debt.” Depending on their career goals, a less costly option may be a better way to go. California Community Colleges have transfer agreements with both CSU and UC systems that make it easier for students to transfer after earning a 2-year degree. For many, trade schools make more sense. And always, always, apply for any financial aid possible before making a decision.

  • Buying a house is your best investment
     
    Let’s face it, this is Southern California! With housing prices that are among the highest in the country, buying is no longer the “safe” investment it used to be. (Anyone who was hoping to sell a home during the financial crisis can attest to the fact that “safe” is a relative term, at best!)

     In my experience, it’s pretty rare for 20- or 30-somethings these days to pick a location and stay put. Jobs change. Opportunities shift. Sometimes changing locations is the only real choice. When it takes as long as 5 to 8 years to break even after transaction costs, renting becomes the rational choice. This article from the OC Register offers some great examples of renting vs. buying in Orange County. The numbers are slightly outdated (it’s from October 2018), but it illustrates the point well. Saving for a down payment in today’s environment can also stretch a budget to the breaking point, which does nothing to increase financial confidence and security.

    The takeaway: If your child or grandchild can afford to buy, great, but don’t assume it’s necessarily a smart investment decision. Let them do the numbers, and if the statement is true, you can always say, “I can help pay for that,” to ease the burden.

Of course, there are lots of financial rules of thumb that haven’t changed. Invest early and often. Only buy what you can afford. Avoid credit card debt like the plague. Pay yourself first. Build an emergency fund. But know that the world is always changing, and be careful about offering advice to others—and especially to your children. When they’re ready for financial guidance based on numbers and facts, the best advice you can offer is to suggest that they work with a fiduciary Certified Financial Planner (CFP®) who can take them from the big picture down to the details. As always, we’re here to help!