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Carrie Schwab-Pomerantz, CFP Headshot

Helping Recent Grads: How Much Financial Support Should You Give?

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Dear Carrie,

My 22-year-old son graduated from college this spring. Now he's struggling to find a good job -- and I'm struggling with how to help him transition into the real world. How can I help him get his footing?

-- A Reader

Dear Reader,

This is a tough one for us as parents. After paying for a high-priced education, it's hard to see our kids in low-paying jobs that don't relate to their ultimate career aspirations. However, according to a 2014 study by the Federal Reserve Bank of New York, 44 percent of recent college graduates hold jobs that don't require a bachelor's degree.

To put this in perspective, it's important to realize that this has been pretty much the norm for the past several decades. And historically, these figures go down as kids have more time to transition into the workforce.

So the "real world" right after graduation may look a little different than you or your son anticipated. But that doesn't mean he should stop trying to get a good job -- or that you can't help him get a handle on real-world finances. I believe there are several things you can do to be supportive and at the same time help him move towards independence.

Don't just write a check
That's number one. It's great if you're in a position to help your son financially, but be sure to make your support specific. Here are a couple of thoughts on how to do this.

Let's say your son is living at home (according to a 2013 Pew Research report, 56 percent of kids 18-24 are!) and finds a part-time job. Start by discussing his expenses -- transportation, food, clothes, entertainment, credit card balances, student loan payments, possibly even rent paid to you to cover his share of household expenses. Help him develop a monthly budget, and talk about what his salary realistically will cover. Then, you could consider supplementing his paycheck to help cover his essentials -- providing you can afford to do so.

Or if your son is living on his own, be clear about how you'll help support him. Ask to see his budget so you know exactly where your money is going. You won't be helping him achieve independence if you pay for everything.

Give him an incentive to save
Saving is one of the hardest things to do on a small salary, but one of the most important no matter how much you make. So encourage your son to open a savings account where he can sock away money for an apartment, a car, or other goals. Also talk to him about the importance of an emergency fund. As an incentive, you could offer to match a portion of his savings.

Once he has earned income, encourage him to take advantage of his 401(k) if his company offers one; otherwise have him open a Roth IRA. Again, you might offer to match his savings, or contribute a certain amount with the proviso that he adds a percentage of his own income every month.

A colleague of mine did this with her daughter several years ago, and now has the pleasure of seeing her not only saving regularly, but managing a growing retirement account and handling her own investing. Which brings me to the next point.

Show him the money
It can be hard to talk about money, but now's the time. Show your son how you invest and manage your portfolio. Talk about your approach to risk and return. Give him some facts and figures to make it real.

Online tools are a great way to introduce investing concepts and basic portfolio construction. There are a number of websites that provide investing basics as well as tools and calculators that demonstrate how even a small amount in a diversified investment can grow over time.

Then help your son choose his first investment. With some seed money in his IRA, investing can come alive -- and hopefully inspire a life-long interest.

Use your connections
With the majority of resumes submitted online and competition in the thousands for even the most entry-level jobs, a personal connection is invaluable. If you have professional associations or friends in a field related to your son's area of education and interest, don't be shy about approaching them for help in his job search. Even an informational interview can be an important learning experience and could open the door to future opportunities.

Be understanding -- to a point
Graduates have to understand that they most likely won't walk off the stage with their diplomas straight into their dream jobs. And we parents have to understand our kids' challenges and the time it takes to land a job.

Keep talking openly with your son about his goals as well as your expectations. Be understanding and supportive -- just be clear about the limits of your financial support. That may help each of you more easily accept the ups and downs that are all part of his ultimate personal and financial success.

Looking for answers to your retirement questions? Check out Carrie's new book, "The Charles Schwab Guide to Finances After Fifty: Answers to Your Most Important Money Questions."

Read more at http://www.schwab.com/book. You can e-mail Carrie at askcarrie@schwab.com. This column is no substitute for an individualized recommendation, tax, legal or personalized investment advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager.

COPYRIGHT 2014 CHARLES SCHWAB & CO., INC. MEMBER SIPC. (0714-4252)

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