If one or more of your kids have graduated from college in the past year, then you probably know all too well how difficult it is to land a job right out of school these days. According to the US Department of Labor, the unemployment rate for graduates with bachelors degrees rose from 11.5 percent in 2013 to 14.9 percent in 2014. And a 2011 online poll conducted by the National Endowment for Financial Education revealed that nearly 60 percent of parents in the US provide financial support to adult children who are no longer in school. But before you start to panic (or regret spending all that money on tuition), here are five easy ways to help your college grad learn what they dont teach you in school: namely, how to become financially independent.
- Help them distinguish between wants and needs. Most college grads are inclined to spend money unnecessarily. Convince them that paring down to the essentials is a necessity. They dont need to eat out all the time, for starters. If theyre living under your roof, suggest that they limit their spending to groceries, medicine, toiletries, and gas.
- Suggest cheaper ways of entertaining themselves. If your kids arent prepared to sacrifice certain wants altogether, help them find alternatives that wont make a huge dent in their wallet. Add them to your Netflix account, or encourage them to join a public library. In addition to books, most libraries loan out DVDs, TV show box sets, and even video games.
- Let them know that an entry-level job is better than none. College grads can get discouraged if they dont land a high-paying job in their chosen career field right off the bat. But an entry-level position in an industry theyre interested in can lead to bigger and better opportunities, especially if they prove themselves – and impress a person of influence along the way. Remind them that taking a job – even if its not their dream job – will help them meet their expenses, build their resume with valuable skills and experience, and establish crucial networking connections that can pay off in the long run.
- Encourage them to create a budget. One of the most valuable lessons you can teach your kids is how to live within their means – especially if theyve never had to support themselves before. Give them a jumpstart by suggesting that they add up the essentials – like rent, utilities, groceries, transportation, and student loans. From there, they can get a sense of how much is left over for spending and saving. Remind them that the bottom line for every budget is to spend less than you make.
- Suggest that they defer loan payments. If your college grad cant land a job and wont be able to make loan payments anytime soon, suggest deferment or forbearance. Deferment means you are unable to repay the lender (in most cases, the federal government) in the foreseeable future. This only applies to Federal Perkins loans, Direct Subsidized loans, and Subsidized Federal Stafford loans. Forbearance is what you apply for if you dont qualify for payment deferment. If an illness or financial hardship is the cause for your childs unemployment, he or she may qualify for forbearance.