By Andrew Housser
If the hiring trend continues as it has over the last several years, fewer than half of this month's college graduates will be employed in a full-time job in their field this time next year. This statistic is especially concerning given that many graduates leave college already saddled with debt. Two-thirds of students have student loans, with an average balance of $27,000. More than three-fourths carry credit card debt of $3,000 or more.
What is a cash-strapped, under-employed college graduate to do? According to a survey conducted by the consulting firm Twentysomething Inc., 85 percent of today's college graduates move back in with their parents for a little while. This has earned them the moniker, "the Boomerang Generation."
If you are a boomerang or the parent of one, you can make the home transition a positive one by following these suggestions.
1. Set house rules. For grads: Moving back in with the folks should not mean losing your independence. For instance, adult children should still be in charge of their own laundry and meals, and help with housework and yard work. For parents: Understand that your adult children need a certain degree of privacy and to be treated as young adults.
2. Earn your keep. For grads: You might not have any luck landing a job in your chosen field right away. But this is not a summer vacation. You have expenses to pay for (and your presence is adding to your parents' expenses), so start filling out applications for jobs waiting tables, cashiering, working as a nanny -- anything that pays. For parents: As a parent, you need to set expectations. Yes, your child needs time to pursue an actual career in his major. Technology has made finding jobs and submitting resumes easier (plus, applications can be submitted at any hour of the day). That means an adult child can earn a wage while looking for better employment.
3. Create a budget. For grads: Write down your set monthly expenses -- student loans, car payments, credit cards -- and variable expenses like groceries, gas money and clothing. This will help determine how much you need to bring in each month and how much you can sock away in savings so that you can one day afford to move out. Think of this time living with parents as a "dry run" before you fully go out on your own.
4. Don't rule out rent. For parents: A budget helps parents see what they can reasonably charge for rent. Parents should not feel guilty for asking for rent money. One study found that nearly half of live-at-home young adults pay their parents rent. Almost 90 percent help with household expenses. Asking kids to pitch in serves several purposes. It introduces young adults to real-world expenses that they will incur when they move out. It ensures that young adults maintain some income stream. It helps parents offset additional expenses, like water and electricity usage, that they incur with another adult in the home. Some parents opt to put kids' rent payments into a savings account for the adult child to use to furnish a new place (when he or she moves out) or to use as a down payment on a home. If parents make this decision, it's best to wait and share it with the adult child until he or she is ready to move out. Otherwise, it could take away the incentive to pay rent.
5. Don't get too comfortable. For grads: Your childhood home is a safe haven -- but it really is part of your childhood, and it needs to be left behind at some time. If your living situation is working out well, your parents may see no reason for you to move out (and vice versa). But living on your own is part of growing up. Before you move in, set a target date for leaving -- and tell your parents about it so that you are held accountable. Even if you are not employed in your career by the time that date arrives, avoid the temptation to stay. As long as you are gainfully employed, you should be able to get a place -- perhaps with a few roommates to split expenses.
Moving back home is a big adjustment for both parent and adult child. It requires careful planning, open communication and mutual respect by all parties. Both parents and recent college graduates need to be realistic about today's job market and career prospects. Even when new graduates do find jobs, their starting salaries may well be lower than for their counterparts who graduated a decade earlier. It is possible for today's college grads to eventually stand on their own two feet. However, many find that they need a helping hand from mom and dad first.
Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.