The piece is here (free registration required).

I know many here will decry this form of help. I don't know how typical this is (it would be hard to even gather any semi-reliable data on this). But it does seem like the Time's Anna Bahney isn't focusing on what was memorably described in The Millionaire Next Door as "economic outpatient care". And the point from the parent about enjoying her inheritance with her kids now will surely resonate with many who have plenty of cash and kids or grandkids.

My initial reaction is that provided their are clear understandings about what is being provided and on what terms (if any), this might be a prudent thing to do in any number of circumstances.

An excerpt:he receives monthly assistance from his parents, in the form of a $300 check and the payment of his cellphone bill.

This is not the largesse of wealthy families doled out through trust funds. Nor is the money a couple of $20 bills tucked into a card at the holidays. Mr. McGuinness and others like him are the beneficiaries of an increasingly common subsidy arriving regularly from Mom and Dad, something like a family fellowship.

It helps to pay for housing, bills and travel expenses, and the support has been increasing for the past two decades as education is extended, marriage is delayed and young people take the scenic route from adolescence to adulthood.

"Everybody I know is supporting their children in some way," said Gail Horowitz, Mr. McGuinness's mother, a vice president of the Zlokower Company, a public relations firm in Manhattan. Unlike young adults who "boomerang" back home to live with their parents — the subject of the recent comedy "Failure to Launch" — these young people live independently. But they need help to make ends meet, or put another way, to maintain a middle-class way of life.

The bottom line is that the assumption that financial obligations to children ended after graduation from high school or college is going the way of the pay phone. Today, parents are finding that they are on the hook for more, sometimes much more — contributions of thousands of dollars a year to help young men and women get on their feet economically, often into their 30's.

DaveHanson said:
My initial reaction is that provided their are clear understandings about what is being provided and on what terms (if any), this might be a prudent thing to do in any number of circumstances.

Dave, outside of the obvious(helping a disabled child, assisting in times of family tragedy, etc.), what circumstances do you envision? I have a brother and brother-in-law who both are the recipients of this form of "help". I'm not sure that they are better off for it or not.

"He works as a media research analyst, making about $30,000 a year. Sharing a two-bedroom apartment on the fourth floor of a walk-up building with a roommate on the Upper East Side, his portion of the rent is $1,100 monthly...he receives monthly assistance from his parents, in the form of a $300 check and the payment of his cellphone bill...He orders takeout dinners, carries peanut-butter sandwiches to work and occasionally takes in a Mets game with friends."

I don't know much about media research analysts, but if their salaries stay pretty much in the range of $30k, his parents will get sick of supporting his lifestyle, or he'll move out of Manhattan. I'm sure if he ate out less or ordered less take out dinner's he can easily save $300 a month. The cell phone thing I don't find as a big deal since he's probably on some family plan with his parents and not his own cell phone bill.

Very interesting article and from my own personal experience in NYC, I know how true it is. Not sure how prevalent it is outside of major areas where the prices are ridiculous to live.

The first guy mentions sharing a 2 br apt paying $1100 for his portion with just one roommmate. He actually, has it pretty "good" relatively compared to people I knew at that age, including myself (way back when) who had multiple roommates in smaller places.

My first place in the city, I shared a 1 br with a psycho chick, where I had the br and she had the living room. I paid $550/mo (including nothing but rent.) Yup, I was 23, then and got not a dime from my family. But, I was young, on my own and living in Manhattan. (My next place a friend and I got a 2 br in Forest Hills and then I paid $600 for my share of a LARGER apt.)

My first two job offers post college were also @$13k/yr and no, I couldn't live on that, even still living with my parents. I did stay with them, until I got a better offer and was making double that. Without helping me with a roof over my head post graduation, I probably would have been in some disgusting apt, living with 6 other people.


"Nearly half of children between 18 and 34 also receive aid in the form of their parents' time — driving them home to the city after a visit, doing laundry, taking care of grandchildren — that has financial value. Time assistance from parents averages about 367 hours a year, or nine weeks of full-time work."

Wow, I must really be a moocher then. Maybe twice a year my parents will drive me back to the city after I have done some serious grocery shopping in NJ, because it is way cheaper. 9 out of 10 times though, I just take the train back home. Laundry? Sometimes, but it is more hassle for me to schlep it than to do it at home. Only if I *really* need to have something clean for the next day. In both cases, it is a matter of my parents insisting vs me asking them to drive. I hate sitting in car traffic.

My mom, who lives in NJ, has actually told me that in some way or another, ALL of her friends seem to be helping their adult children. The kids all have different needs, which do range from the grandparents watching the kids, to help waiting for a delivery to come when someone is at work. Some needs are financial. One friend bought a studio apt for their grown daughter who has difficulty keeping a job. They support her vacations as well.

I can understand both sides of the argument, helping vs not. While my parents wanted me to know independence (as did I) living with too many strangers was beyond what they could handle when I was 21, hence me living at home until I got a better job. Parents want what is best for their kids and often times want to give them opportunities they didn't have.

This thread should be interesting. Also, I can totally relate to the money=control issue brought up in the article. There are always strings attached even if left unspoken. Definitely pushed me to get *my* act together and be independent.

Seems to me the general trend is the line between parents and friends gets more blurred.

There was an article in the local news paper about parents showing up for job interviews with the candidates and makes call to follow up on job interview and tries to negoiate job offer for their kids. (I can't find the link). Boeing actually now asked if the job offer needs to be copied to parents as well according to the article.

While I think a close parents-child relationship is good, some people carries this a bit far.

After college, I took a job that paid acceptably well (not spectacular), but was enough for me to live on if I lived modestly. I moved to a new city and lived within my means. Although my parents frequently offered extra monetary support, I refused to take a dime. We grew up in an upper-class lifestyle, and my parents wanted to help me maintain that (out of love), but after reading Millionaire Next Door, I was determined to do things on my own.

As a result, it forced me to learn to appreciate what I had, and that it's "ok" to be frugal and not drive expensive cars or wear expensive clothes. Knowing my budget, I saved aggressively and pooled that into my own business to pad my income. It was that understanding of money that led me to save more, and work harder to accumulate wealth entrepreneurially. About 3 nights a week I would come home from my day job to work on my own business, and then Saturdays and Sunday afternoons.

With that work ethic, within just 10 months, I built a six-figure business and shortly after, landed a six-figure compensation job at age 23 with a top company. I never regret for a day that I did not take my parents help after college, because if I did, I would have never had a reason to work as hard as I did or take the risks that I did. The monetary support allows you to become complacent. I've seen it happen to so many other kids (and even my family).

My parents are first-generation immigrants, who came from the third-world to build up million-dollar fortunes, and I feel like it's my duty to care for my parents in adult life, and not the other way around. In fact, it's not my duty, but my honor.

-Anx

DaveHanson said:Not a criticism at all, but I'm not sure I see why you'd help the kids pay for grad school, but not college. I'd be more inclined to do the reverse. That gives a greater incentive to do well in college (getting better fellowships and what not), and also lets kids focus more on studies than $6/hour work study jobs.

In any case, generally speaking, it sounds like the real issue for you--as for me--is making sure the incentives aren't operating to undermine initiative and hard work, but rather to encourage it. Are we on the same page as far as that goes?

I'm also not clear on why grad school - although I also wouldn't fund college. I've yet to see the education that was much affected by $6/hour work - good for the character and that's more important than college. Purely anecdotal but my friends who paid most the bills saw their children meander from program to program. Eventually they graduated with degrees they'd never have gotten without the support - english lit or history. Setting up their parents for years of further support.

More specifically I think a clear commitment to fund undergraduate studies undermines the whole very healthy process of working hard in high school to qualify for as much $$ in scholarships and aid as possible. Aggressive rentseeking from govt and private donors - that I can respect.

Alas I'm not in charge and my wife is - pretty sure we'll be paying tuition bills.

I call BS. I have a lot of colleagues who are working past the point they'd like because they've continued to support their children at the expense of their own retirement. Not that they're impoverishing themselves - just that they haven't been able to meet their savings goals because they haven't been able to shut off the spigot. At some point, you have to let your kids become adults.

slimcustomer said:
Not paying for college starts the incentive process much earlier. My oldest in particular is very focused on achieving in school and saving money for college, much more so than her "more priveleged contemporaries". Holding out the carrot of paying grad school should give them enough of an incentive to do well in college. If they don't do well enough to get into grad school, that carrot will disappear. I'm not worried about work distracting them from their studies either. My best semesters were when I worked 45+/hours a week. Between work and school, I didn't have time to get into trouble like a significant number of student who never ended up graduating. Herein lies the rub. College is a horrible investment for the significant percentage of students who never go on to graduate. My in-laws probably sunk $100,000 into one of their sons' education and he never graduated college. He would be even worse off had he taken out loans for himself. Don't get me wrong, college is a great investment for many, but there is a huge survivor bias towards those who graduate. Those who don't graduate or do so with marginal GPA's could have better invested their time and their parents money elsewhere.


Excellent point - I'd show this to my wife but nah, I'm in enough trouble now.

We need another article about how 80 to 100 year old parents are being subsidized by their children. This is something that didn't happen as much in past generations because people died earlier - closer to their own retirement age. Now that there is usually at least twenty years and sometimes 30 or more years after retirement, parents are being supported by their kids.

It all sounds good to me. I lost both of my parents at an early age so I won't have that responsibility (well, my mother in law is in her 60s). However, I can't imagine anything I'd rather spend my money on that something for my child, even if they were 20 or 30 years old. I don't need to buy more stuff or take a cruise or any of that. And if I just save it, they are going to inherit it anyway: might as well give it to them at an age they might actually need it and not when I die when they are 50 or 60 and financially stable themselves already.

I can hear some people thinking that if you give kids money, they have no incentive to work harder and make their own living. That's a risk I'm willing to take in exchange for teaching them the lesson of sharing our wealth with those in worse situations than our own (i.e. from established earner like me, to them as stuggling students or beginning professionals!)