Smart Ways to Support a New Graduate Without Sacrificing Your Own Financial Security

There was a buzz in the air the day Emma graduated from university. It was a day of celebration and pride, mixed with an eagerness for what was to come. As is the case with many new graduates, Emma had numerous choices to make and an equal number of potential problems to face. There was student loan debt, job hunting decisions, the rising cost of housing, and a general fear of no longer being financially independent.

Emma’s parents wanted to assist their daughter. But how?

According to financial advisors, parents should not jeopardize their own finances in an effort to support their children. While the desire to assist is understandable, parents need to protect their own long-term financial well-being.

One way of assisting is through education. Teaching a graduate about managing their money, budgeting, saving and investing, or the responsible use of credit, provides benefits that last longer than a gift. Often, knowledge is more valuable than money.

If a parent decides to help financially, a targeted contribution could be quite helpful. Giving money to a graduate for job search expenses, relocation, or a required certification would assist the graduate financially without obligating the parents indefinitely. These types of gifts are typically easier for parents to handle than outright donations of money.

Another possible source of support is having defined parameters. Some families set parameters about temporary assistance. Whether this means allowing the student to live at home for three months while finding a job or paying for certain costs for a short period, having expectations about when the assistance will stop encourages independence.

Parents should not forget about their own financial obligations, especially their own retirement savings. Experts continually emphasize the fact that while students can go into debt for education, retirees typically cannot take on debt to finance retirement. "You cannot borrow for retirement the way you can borrow for education," one financial advisor said. Sacrificing your retirement for the benefit of a new graduate can lead to financial hardship for the parent later.

Finally, graduates need emotional support as well. They may need the advice of an expert or an opportunity to network and build contacts, they may need guidance on careers or support and motivation when things go wrong. These kinds of donations cost nothing and can significantly enhance future prospects.

For Emma, her parents gave her financial assistance for her first move to a new city as well as verbal support for managing her finances. Her parents also allowed Emma to know they were available if she had any concerns, all while continuing to fund their retirement accounts and manage their own expenses. It was, and remains, a sound strategy.

Emma gained experience and independence over the years and her parents’ help was beneficial, as it empowered rather than compensated for her own personal responsibility.

This type of strategy is beneficial to countless families. The key is that parental support for new graduates doesn't mean open-ended financial assistance. Carefully considered help, combined with useful financial knowledge and some well defined boundaries, can make all the difference in the world-for both the graduates and their parents.