Should Parents Bail Out Their Kids?

NOTE: The reader-submitted question of the day will begin tomorrow morning.

Should Parents Bail Out Their Kids?

That is the title of Liz Pulliam Weston’s article over on MSN Money.

I can’t remember a time when I ever “bailed out” financially by my parents. Sure, they helped me from time-to-time and my wife’s parents helped us with groceries and stuff when my wife and I were in college but nobody bailed us out. Why? Because my wife and I knew our place. In other words, we didn’t go out and buy things we couldn’t afford. We were responsible for ourselves.

Normally I agree with Liz but her excuses for why today’s kids get into trouble bother me. Check this out:

Most baby boomers had the economic winds at their backs. They graduated into decent job markets and enjoyed strong appreciation of their homes and (for the most part) stock portfolios.

Today’s graduates, by contrast, are a bit more behind the eight ball:

  • A rapidly decelerating economy means college graduates are facing the worst job market in several years.
  • Instead of getting free money in the form of grants to pay for college, they’re taking out student loans — an average of about $20,000 at last count, an amount that’s nearly doubled since the mid-1990s.
  • And then there’s the demon credit card, pushed on college campuses today with a vigor unheard of a generation ago. The majority of students now have credit cards, according to studies by student lender Nellie Mae. The average balance was $2,864 for college seniors in 2004 and $8,612 for graduate students in 2006, the latest years for which statistics are available.

Excuses, excuses. Tell me, what generation hasn’t had obstacles to overcome? Didn’t the Baby Boom generation graduate from college into the inflation-ridden 70s?

I think the root of the problem lies in the fact that today’s kids think they deserve everything right off the bat. There’s no working and saving up for things. At least that’s my perception of today’s society. Maybe I’m wrong and maybe I’m being harsh but I think today’s kids need to figure out that everything costs money and that they are going to have to prioritize their finances and make decisions accordingly.

Our kids are still young so it’s tough to say how my wife and I will treat them when they are adults. I’m hoping that they will have a good understanding of their responsibilities when they leave home. I can tell you that if they were to ever come back home after leaving, rent will be due. Hopefully it won’t ever get to that point.

What are your thoughts?

18 thoughts on “Should Parents Bail Out Their Kids?”

  1. When I was in college in the early 1980s, many of the upperclassmen I knew were going to graduate school. Was it due to their love of higher education? No, they couldn’t find jobs. I can’t believe Liz Pulliam Weston would waste ink saying that people in the past had a better job market. When I was in high school, you had to KNOW someone to get a job at Burger King that paid minimum wage. Nowadays, you can get online, blog whatever pops into your head and make a few thousand $$ a month 😉

    Things that make me feel for younger kids looking at college/working age:

    The spiraling cost of higher education.

    The unbelievable access to easy credit.

    The demise of skilled/semi-skilled trades.

    I do believe kids have a serious case of “keeping up with the Joneses” but I think their parents contribute to this: when was the last time you heard of a kid doing without? In my small town, I know of parents who don’t get paid much, yet their kids have X-box 360s, 4-wheelers, iPods, whatever the latest craze is, they’ve got one. How do you teach a kid they could do without if they never do?

  2. JLP,

    I am 24 years old and let me be the first to say “Amen”.

    Most people in my generation have no sense of personal responsibility, even though they talk about how they worked so hard through college, how they want to work towards a good career, etc.

    This is all veiled way of saying they are entitled to load up credit cards and enjoy material life to the grandest right out of the gate. No one wants to pay their dues.

    I am very humbled when I speak with older people who lived through the Depression, and the sense of responsibility they attach to their personal financial decisions. I only pay with cash and it’s the only way I’ll ever do it.

    But before you blame kids our age, remember two things:

    1) Not all of us are so irresponsible. There are a lot of responsible, hardworking people our age, people who very much respect earning your keep the old-fashioned way and

    2) Guess who raised today’s twentysomethings? The other entitled, self-centered generation of our great country: the Baby boomers!

  3. I agree wholeheartedly with Alex, my parents always managed to buy my brother all the crap he wanted, and they wonder why he won’t look hard for a job (as they keep giving him money for gas for his car, paying his insurance, etc)… I mean he is only 17, but still…

    I have a friend who is 24, graduated from college 2 years ago… her parents put their foot down and said they wouldn’t send her to grad school, but she is still living at home, doesn’t have a job (her dad got her one, but she quit because she didn’t like it, because answering phones is apparently too stressful), her parents give her gas money, feed her, and they wonder why she has no motivation to find a job.

  4. It remains to be seen how this slow down/recession will compare with 1992. I graduated then with a degree in Physics and a full time job pumping gasoline at a full-serve station, or “Fuel Transfer Engineer”.
    I moved back home, eeked out a meager living, and trying a few graduate classes at a state school.
    No loans from my parents, my brother and I had to pay a small amount to defray the grocery costs.

  5. You hit the nail on the head with the sense of entitlement. College grads should have no problem finding a job – they have little experience and hence should be a cheaper employee than more seasoned (read EXPENSIVE) employees. The problem is they expect to make $50,000 right out of school with a degree in liberal arts.

    If the student has chosen a career that is in demand, and is willing to prove his worth to gain experience then the sky is the limit!

    Having said that, I do think the cost of higher education is absurd, but as long as people get government aid and can take out loans the universities will continue to get paid and hike their tuition.

  6. I’m in my late 20’s, and it bothers me when people in my generation expect their parents to help them out. I sometimes wonder if that’s a function of how the kids were raised though. If If your parents have always given you everything and you’ve never had to work for anything, what would make you think that would stop?

  7. Eh, the job market hasn’t really been very bad since the ’70s. What’s unemployment at now? ~5-6%? That’s still extremely low. $20,000 in loans is not a large amount. And although that amount has “nearly doubled” since the mid 90s, taking inflation into account ~$14k in the mid 90s is the same as $20k today, so I suspect the real increase is actually rather small.

    And anyway, $20k in loans is less than $250/month in payments. And I don’t see how credit cards are a “bad” thing. If anything they should be good since they have lots of advantages if used correctly. Of course people are irresponsible.

    But I’ll also take a contrary view. Everyone thinks that the newer generation is worse than previous ones. There are probably lots of reasonable psychological/sociological reasons for that, but it’s nevertheless true. Of course people don’t really change all that much over 20 years, so I doubt that there are any personality differences.

    If anything the increased reliance on parents is probably a result of having successful parents. People are smart, and if they don’t *have* to pay for themselves, why should they? You may value personal success and independence (as do I), but many people don’t, and honestly I find it difficult to argue why one of those views is better. The goal of life isn’t to live up to some “self-reliant” ideal. So if your parents can afford to support you, why shouldn’t you take advantage of that?

  8. No matter what the circumstances are, we are all responsible for ourselves and the choices we make. Spending more than you earn is a choice – a bad choice – and I don’t think that there’s really any excuse (like a bad job market or student loans, etc.) that can make up for that.
    Everyone should take ownership for the decisions they make.

  9. I’m 23, and my parents haven’t helped me with any expenses since college (during which I picked up the tab for some of the tuition and all of food, textbooks, and other supplies). None of my friends depend on their parents, either – but I guess that’s because I couldn’t afford to hang out with the crowd whose escapades were financed by trust funds and doting parents.

    I think every generation of college grads has a small percentage of self-reliant, responsible young adults, and a small percentage of people who need extensive support (“bail-out”) from parents. Everyone else falls in between.

    Still, you might be right about the sense of entitlement that today’s young adults have. I don’t think it’s necessarily their fault. My generation grew up with the message that we can be whatever we want to be, that we should find ourselves and do something rewarding and satisfying, money be damned. And our parents (Boomers) had the means and the New Agey desire to support our self-discovery.

    Some of us still turned out okay. 🙂

  10. Let’s no forget that student loans are not created equal. A $50k loan for a BS in engineering is a lot different than a $25k loan for an MFA in cinema studies; the problem is the people in the latter situation feel entitled to the same income as someone in the former.

  11. Let’s no forget that not all student loans are created equal. A $50k loan for a BS in engineering is a lot different than a $25k loan for an MFA in cinema studies; the problem is the people in the latter situation feel entitled to the same income as someone in the former.

  12. My $27,000 in student loan debt is a lot different from the tens of thousands of dollars some people in the preceding generation have on credit cards. No one ever told me that it wouldn’t be worth the debt. All I ever heard from adults was, “The Bachelor’s degree is the new diploma.”

    I get this all the time from my older coworkers, and it never fails to infuriate me. We are inheriting an SUV-toxic, subprime-mortgage, outsourced economy and you have the nerve to say that WE have a sense of entitlement? What greed, irresponsibility, and lack of foresight got us here? We’ll see who feels entitled when my generation is shouldering this debt (both public and private) while the preceding generations try to figure out what to do with the decades of retirement that they think they’ll be able to relax through.

    We’re walking out onto the platform as the train wreck is happening and you turn around and blame us.

  13. My parents helped out my younger sister. But they put up a whole bunch of conditions that she has to follow.

    Parents have her debt cards until she can demonstrate better control. Have made her withdraw money from the bank in order to pay for things.

  14. I agree and disagree with a lot of what everyone has said. I personally have been bailed out of a very bad situation by my parents. I was engaged. My fiancee and I bought a house together and then she disappeared. We could afford the house easily together. But I could not afford it alone… Since then I have found some good roommates to help me out until I can finish school and afford it on my own. I am also working three jobs to pay my parents back as well…

    I do agree that a large portion of my generation needs to wake up. I just do not like generalization of anyone people.

    Some of us did not get into these situations through irresponsible behavior, some just have bad luck… I also agree WHOLEHEARTEDLY with Jason. I have enough to deal with simply being as young as I am. But to try and tell everyone the reason we are tripping and falling on our faces is our fault?! With the economic situation the way it is at the moment, how are we supposed to succeed. We have very little part in that disaster. In order to find a decent paying job in my area I have to travel at least 30 miles from home. And that is almost not worth it now because of the gas prices…

    Some of us are trying our damnedest, but its not all as easy as it is portrayed. It is NOT easy to find a job now. I have been looking around. And my father just keeps telling me to get off my butt and go look. I have applied at McDonald’s, walmart… All the tourism driven places in my area and NO ONE is hiring… People are not vacationing like they used to in the past. People are choosing to eat in instead of paying 4 bucks for a hamburger, when they could just save that for gas….

    OK I’m done…

  15. I know a lot of people my age (early 30s) and several years younger who are incredibly bad with money. What they have in common is parents who gripe and moan, but give in to their kids every time. Their kids are spoiled. As a result, they live at home, borrow money, borrow cars, and generally take advantage of their parents, but how can you blame them? It’s what they know.

    Of course it’s incredibly irresponsible, but what’s worse is how unsuccessful I find these people in all other aspects of their lives. How can they have a successful career or any good relationships if they don’t know how to compromise? 60 Minutes did a piece on the Boomerang Generation which was enlightening, if depressing.

  16. Hard to convince someone younger to "save for a rainy day" when they have never seen one. Still, emphasis on "saving" and conservative finances is the issue.

  17. I can only hope and pray my daughter knows the value of a good dollar, at this point at three years old she collects the penny off the street and saves it, this is to her own doing and not mine, but i do comment to her to save her coins she finds.
    So with this said, i come from a family with money, the one thing speaking as one who grew up with silver spoons in the mouth, i can say is this:
    parents like my father always bailed my brothers out of big time problems such as speeding or DUI’s ect, this isnt just a college thing this goes far beyond educational.
    it starts from a young age to, how willing are you to allow your toddler/ young child to be taught to clean up their own mess no matter how long it takes for them to do it?
    Most parents who have spoken with me on this topic say, “its easier for me to just gey the job done for them so i can focus on other things that need to be done.” if parents took the time to teach them while they are young, and stick to the boundries in which they instill on younger children throughout their lives, you will have a well rounded individual who claims self responsability.
    My father never had to bail his daughters out, not out of anything major mind you. However my sister was given credit cards in college, and her entire tuition was paid for.
    I being the youngest never had the luxury to gain daddys credit cards for sole purpose of buying whatever i wanted.
    I think he learned the fast and hard way never give your children no matter what age, free range to buy on credit that isnt their own.
    my father surely meant well when he tried giving all four of us the things he never had growing up.
    However i can say i am very greatful for never having given the same priviledges my sister, or two brothers were given.
    I see now how its ruined their lives, they will never fully live their own lives without help.
    I am not saying i never asked for help, but seeing as a whole family unit, how its ruined others lives, encluding my fathers, just howe important it is to teach young, never teach with your emotions, because once you start teaching with your emotions, such as “I dont want my son going to jail over a speeding ticket he was to scared to tell me about, i need to bail him out before he goes to jail.” once the emotions kick in to bail this individual out, they will ALWAYS expect the bailout, and if you dont continue to bail out, the individual then thinks ” my mother, my father dont care.”
    start early, teach them young, before it can even get to a situation that requires bail out.

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