In 2012 the Pew Research Center published an article on The Boomerang Generation. They found that 24% of adults ages 18-34 moved back in with their parents due to their economic situation. As some of you know, my boys, ages 23 and 20, are part of the Boomerang Generation. My younger son, Tyler, has mentioned that he hopes to live with me when he finishes his studies. As he describes it, he’ll finish college and then graduate school and then he’ll move back in for a few years while he kick-starts his career. This is not how I envisioned my “Empty Nest” years. For many of us, and for many of our children, life has taken a different turn from what we planned. Just last week a group of empty nesters at my church were discussing when their children were going to be “off payroll.” According to Bragg Financial legend, Frank Bragg, our founder, enforced a strict rule of “30-days, head-on-the-pillow” for his children once they finished college. John Bragg reportedly asked his father if those days needed to be consecutive days or if he could spread them out over time. My son, Tyler is requesting several years. Frank Bragg offered 30 days. Quite a difference. What is the right answer?
First let me say there is no “right” answer. Everyone’s situation is unique and must be approached based on the circumstances at hand. However, there are a few points I think we can all agree upon.
Many in this generation are graduating with overwhelming levels of debt. A doctor graduating from Johns Hopkins owing $290,000, an English major from Wake Forest owing $120,000, a sociology major from Chapel Hill owing $50,000. These are all debt loads that impact the graduate’s ability to pay the bills and save for future needs. We need to recognize that this is a significant issue and help our young adults create a workable plan to pay off this debt and get on the path to independence.
Living Beyond our Means
This is not a new phenomenon. For generations, adults have struggled to keep up with the Joneses and our kids have learned from us. Today, the challenge can be greater because of the pressures of social media and easy access to credit. We should remind our young adults that appearances can be deceiving. A person who appears to have it all may be struggling with debt and basically renting a lifestyle. We remind our Bragg Financial Boot Camp students that 8 out of 10 individual driving a luxury car can’t afford the luxury car.
It’s important for our youth to understand basic financial principals. Some of the principals we try to instill at Bragg when we teach our Financial Bootcamp are as follows:
Have a budget. Learn to live within your means.
Identify your savings goals early (retirement, college, etc.) and save regularly.
Learn how compound interest can work for you (assets) and against you (debt).
Realize that your earnings power is your greatest asset.
Acknowledge that your failure to plan is your greatest liability.
Accept that financial success is 20% knowledge and 80% behavior.
Ultimately, we all want our children to be successful, independent adults who live fulfilling lives and make a contribution to society. They’ll travel different paths as they work to find their way in the world. At Bragg, we offer our two-day Bragg Financial Boot Camp to young adults aged 20-25 with the goal of teaching them the basics listed above such that they have the confidence to make good financial decisions. In addition to our Boot Camp, we’ll be adding a section to our website with short financial literacy articles on topics such as investing and planning. We will build on an article written by Phillips Bragg over 20 years ago that is still valid today: You Can’t Have Your Money and Spend it, Too.
This information is believed to be accurate but should not be used as specific investment or tax advice. You should always consult your tax professional or other advisors before acting on the ideas presented here.