Cutting the purse strings Parents get help from financial advisers

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Most parents make sure their kids know what they need to about sex by the time they’re 20.

But money management?

Now, there’s a tough subject, parents of children in their 20s and 30s are saying. In fact, the financial advice baby boomers told researchers they need most is: “How to help my children become more financially savvy.”

That could be because adult children ages 25 and 26 get an average $2,323 per year in financial support from their parents, according to a University of Michigan study. The tab has grown with a trend of “boomerang kids” heading back home to live.

Adult children have become the biggest threat to their parents’ retirement security, says Craig Brimhall, a vice president at Minneapolis-based Ameriprise Financial, which commissioned the New Retirement Mindscape survey of baby boomers.

“Parents feel ill-equipped,” he says, to change adult kids’ money habits, boomer parents said in the survey. That poses a hard question: “Who’s going to do it?” Brimhall asks. He and other financial advisers aren’t sure exactly how to help. But they know their role is to help clients avoid jeopardizing their financial futures.

Now, wait a minute here. Boomers’ kids have it rough, according to a new book, “Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead” (Doubleday) by Tamara Draut. The phenomenon has less to do with poor money management than with skyrocketing housing prices, college tuition increases, depressed wages, increasing health costs and credit-card debt, Draut says in her book.

Brimhall doesn’t totally buy that theory. But to whatever degree it’s true, he says, there’s another big factor. Over recent decades, most Americans’ expectations have changed. He sees few young people putting off owning a car, making do in a small apartment or setting their sights on a modest starter home.

“Luxuries have become our necessities,” he says. That reality can get parents – and grandparents – who subsidize their offspring caught in the middle. “They’re stuck with the job of sorting out the difference between wants and needs.”

While some people can afford to give thousands of dollars a year away, he sees many others who will retire with little money to spare. “If you give too much away now, are the kids going to take care of you later?” he asks.

The number of households with children older than 18 still living there grew by 70 percent in the first four years of this decade, according to the 2005 MacroMonitor study for the financial services industry.

It’s best, of course, to teach children smart ways to save and spend before they’re 20, he says. But if they haven’t learned by then, he urges parents to try teaching those lessons whenever they’re needed.

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