Like it or not, parents; you’ve got the job!
PNC Bank’s recent study on 20-Something’s financial independence revealed an interesting statistic. Parents were listed as the most common source of financial information for 20-somethings. On average, 34% of 20-Somethings relied on their parents for financial information as opposed to 7% who relied on financial advisors. In fact, parents were more likely to be a trusted source of financial advice than banks, financial advisors and friends put together. You’ve tackled role model, CEO and finance manager for years, are you ready to add financial advisor to your list of family job responsibilities?
Today, Krant Cents noted the attention personal finance classes have received in the wake of the Great Recession and the shortcomings of relying on those classes for financial education. I’ve covered the need for parental involvement myself. However, parents seem lukewarm when it comes to filling the role. According to a 2010 T. Rowe Price Survery, 1 in 3 parents give themselves a “C” grade or lower on their financial knowledge.
For those that want to rise to the challenge, here are some personal finance topics that are presenting a unique challenge for 20-Somethings.
According to Daily Finance, only 30% of 20-Somethings have a job in their chosen field and 40% have to rely on more than one source of income. Get up to date on current career outlooks and degrees. Find out what fields are growing and what degrees have a good payoff. No disrespect to those with a social science degree, but it is the second most common degree awarded and has the second highest rate of unemployment.
Total student loan debt now exceeds total credit card debt. Knowing how much student loan debt your children can afford would be invaluable to a generation weighted down with unforgivable school loans. Once finished with college, your children will also need help with figuring out how to pay them back!
Renting Versus Buying a Home
With the shaky economic recovery, 20-Somethings are skipping homeownership in favor of renting. While I have no problem with renting, decisions about housing ought to be made rationally instead of a reactionary, emotional value-judgment about the recent housing market collapse. The boom in renting is threatening double-digit rent inflation, so help your children understand all aspects of housing.
$7 to $12 thousand in credit card debt is all it takes to send a young adult into bankruptcy according to statistics from the Department of Justice. The 25-29 age-group is the second most common age demographic for bankruptcy. Worse still, academic studies show that young adults are attracted to the empowering emotional gratification that comes with debt.
You have a one in three chance in becoming your child’s most trusted financial advisor. Are you ready to help them with the financial decisions that will matter most to them?
According to the PNC study I mentioned, by ages 28-29 young adults switch their financial consulting preference from their parent to the internet. Since one in three 28-29 year-olds are consulting the web for their financial advice, here is some financial advice from the best financial writers on the web:
- You should be an entrepreneur if you can, plus 9 other pieces of good advice for young adults.
- Get through college without student loans: here’s how to do it.