The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: K-ice on July 14, 2015, 11:05:16 PM
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I was looking for advice for a budget for young adult or boomerang kids living at home.
My Neice is 18, upgrading one Highschool class to get her diploma, working retail full time. After the diploma she wants to take a year off.
She has very speedy pants parents who have been on the verge of bankruptcy about every other year for the past 10.
I doubt she is getting any good advice from them.
Given she has free room and board I think she should be saving about 80%. The other 20% can be fun money.
She may not listen to me, but I hope to have some influence.
Does anyone else have advice for this age group?
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Help her draw up a budget... its hard to know if 80% is achievable. .. if she needs a car for her job, fuel alone could eat up a signifcant amount and i don't know if public transit is an option. She may have other bills (like a basic cell phone bill). I would calculate the needs (transport to work, basic phone) add an allowance for socialising (what do her workmates who don't live at home spend on socialising.... probably not much as i imagine rent and bills would consume most of a retail wage) and then save the rest. When i was 18 and working full time my spending was $800 a month, $400 for board to my parents and $400 for everything else. This was very very lean even back then (bus pass, car costs, phone, work clothes etc),.
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Unless she is naturally frugal, I suspect saving 80% is an unreasonable expectation.
I have 1 young adult at home, working more or less full-time and doing uni part-time.
He is naturally very spendy and went overboard a bit but first year out from school there were significant expenses that were legit:
- bought a car, essential for his job. Secondhand. 14 years old, Cheap. Interest free loan from me which he paid back in under a year.
- ongoing expenses in running the car, needed new tyres etc etc
- business attire, suit/shirts/ties/shoes - then dry cleaning costs ongoing
- phone up grade and laptop ( went overboard here IMO, but IT is his thing and he makes good use of them) - then more expensive phone plan ongoing
- uni books and other uni costs etc
He paid his mum some board, but by the time he paid for all of the above I don't think much was left over. Socialising is also an important part of a budget in this age group.
I showed him figures how early investment into a retirement account for a few years will be more effective than leaving it 5 or 10 years to start and he took this on board.
This year he is more set up and his costs are lower, and he has got bit more interested in saving and investing - he mentioned he was saving nearly 50%, which frankly I am overjoyed about.
I haven't promoted an expectation of 80% savings because I haven't personally achieved and modelled that for my kids. I encourage them "to save 50% and after about 20 years, they will be able to retire, or do whatever work they want. " I figure once they "get it", if they want to go harder they will.
I think be around, build the relationship, talk about finances, help her with her budget and show her there is an alternative to YOLO. By all means mention some people save 80%, but unless she is naturally frugal I think this will seem so extreme as to be off putting.
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I'm curious, why do you feel the need to meddle in your nieces life?
Depending on your relationship this is not going to end well either way.
This.
Not your kid, not your responsibility. If your niece reaches out to you about it, great, but offering unsolicited advice will probably insult her and / or her parents. How would you even broach the topic? "Hey, your parents suck at managing money and I'm pretty sure you're stupid enough to follow their example, so let me tell you how you should spend your money." I'm sure that will go over well.
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I echo the sentiments above. Also, 80% savings seems pretty arbitrary to me, absent some context about her financial goals (does she even have any, and has she shared them with you and asked for your advice?) Just because you can save 80% of your income doesn't mean you should. There is something to be said for current consumption, and not everyone values mustachianism the way we do. If you want to have some influence on her financial habits, I would open with a discussion about here life goals, and go from there, but I would be very cautious about offering unsolicited advice if she didn't express a good level of receptivity in advance.
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If you want to have some influence on her financial habits, I would open with a discussion about here life goals, and go from there, but I would be very cautious about offering unsolicited advice if she didn't express a good level of receptivity in advance.
I agree with this. Marketing 101: sell the benefits (not having to work, etc) and not the technical details (80%SR etc).
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Happy! That's great he is saving 50%.
If I get the chance to offer advice I will. Sorry, she's not just some random person off the street but someone I would like to see succeed. Obviously, I have no power to force her.
She knows I'm frugal, as the family teases me about it. They have asked and I offered some small advice before. Parts worked, some not :(. Some people just don't get excited about the power of debt snowball excel spread sheets.
Anyway, back to her.
We talked about life goals a bit. She's quite lost. I asked, "Well in school what do those aptitude tests say you are good at?" She said lawyer but doesn't want to study for that long. I suggested she could try a 2y legal assistant program. That's really not my area so if anyone else knows good lawyer type careers I'll pass it on.
Your points are valid that I probably need to work on my marketing 101 more than my number crunching :)
But if anyone else knows what has made it "click" with this age group please let me know.
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But if anyone else knows what has made it "click" with this age group please let me know.
I would think that working retail and living at home for a year after high school will give her some perspective. Either she won't find anything wrong with it and will be happy on that path, or she will decide that some other path is a better choice for her. At least she's not going off to college and racking up student loan debt when she has no idea of what she wants to do. Experience is the best teacher, and the real world gives you plenty of it.
In the meantime, I'd just let her know that you're available to help her learn how to balance a checkbook, do her taxes, etc. Hopefully she'll let you teach her some basic financial life skills and that will give you an opportunity to inject some frugal ideas into her thought process.
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... if anyone else knows good lawyer type careers I'll pass it on.
Exellent career choice! From what I hear, these days most lawyers do one or more:
work at walmart
collect unemployment
sell their organs
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... if anyone else knows good lawyer type careers I'll pass it on.
Exellent career choice! From what I hear, these days most lawyers do one or more:
work at walmart
collect unemployment
sell their organs
You forgot copy-editing. Most of them also seem to have an English degree.
(We could have started a law firm the last time my company put out an advertisement for a copy-editor.)
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Forget the budget. Someone that young is just spending on garbage.
I would wait until she is in a very receptive mood (ie comes to you begging for help, or something).
Immediately, sit down with her, open an account at an online savings company (so she can't access it, easily). And set up automatic paycheck deposits into that account.
Talk about how much should go to that account automatically. That account will be for 'oh shit' or 'future education'. Curse a lot! Kids like that shit!
Tell her she's fucking stupid if she doesn't.
That should get her attention.