Is the pandemic affecting your decisions?
My daughter graduated from college and landed a great job in our hometown. The plan was still for her to get an apartment right away, but with the pandemic, her dad and I are rethinking that plan. She doesn’t have a student loan repayment and she has a decent amount of savings, but for some reason it seems safer to be cautious. At least that’s what we’re trying to convince her of. We gave her the option of living at home for a little while. What do you think?
Elizabeth; Raleigh, North Carolina
Congratulations to your daughter and all your family. To be a graduate without debt and with additional savings is quite an achievement. Looks like your plan has worked so far, now for the rest.
One of the most interesting challenges I have faced over the past nine months is trying to decide how much I should take into account the realities of the pandemic when making decisions unrelated to others.
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At first this happened unintentionally, like in April 2020, when I saw that my spending had tightened considerably, although it wasn’t necessarily necessary. I have since attributed the decision to a healthy mix of fear and caution. The pandemic has tried to influence several other financial decisions since then, from a December holiday to our interest in supporting local restaurants. And what I’ve learned is that the pandemic doesn’t affect my financial decisions as much as I thought.
Based on what you’ve shared, I’m not entirely sure the pandemic, or the economy it leveled before, is relevant to your daughter’s decision.
It is fascinating to see how our goals as parents evolve over time. For the past five years or so, you wanted your daughter to be accepted into the college she wanted, to graduate debt-free, and to get a job fast. And just like that, she accomplished all three. And while I’m sure you want to give your daughter the best start to long term success, the next online goal is actually her complete financial independence from you.
There is no better time in your daughter’s life to struggle financially than now. She has a job, she has no debt, she has savings and it looks like she wants to live on her own. If you overestimate his experience, you will absolutely regret it. Just like when you taught him to ride a bike, the training wheels that come off have been the inflection point for success.
If she didn’t have a job, then yes, she should come back with you. If she had a ton of student loan debt, then yes, she probably should come back with you. If she had no savings, then yes, she should eventually come back with you. But none of these imperfections are reality. If your daughter can’t go on her own, no one can. Seriously.
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Will she struggle from time to time? With a bit of luck. This is how it all works. His resilience, a quality we all appreciate lately, can only develop as independence develops.
If you want to put a final strain on her financial life, encourage her to match her household budget to her take-home pay, after making a healthy pension contribution of at least 10%. And since she has no student loan debt to pay off, she can afford a reasonable apartment and the lifestyle that surrounds it. All the while, she can continue to build up her short-term savings and, more importantly, her independence from you.
The sooner your daughter learns how an income from work can support her chosen lifestyle, the better. This is especially true when it comes to housing costs. You and she have earned the privilege for her to start her professional career living alone. Congratulations on both of your efforts, and now you can both start enjoying the independence you have created together.
Peter Dunn is an author, speaker and radio host, and he has a free podcast: “Million Dollar Plan”. Have a question for Pete the Planner? Email him at [email protected]
The opinions and opinions expressed in this column are those of the author and do not necessarily reflect those of USA TODAY.