Millennials, born between 1981 and ‘96, represent the largest, most educated and culturally diverse generation in American history. This demographic cohort holds significant sway over the future trajectory of the U.S. economy through their financial choices, which are being made within a progressively intricate financial environment. That’s the academic definition. Here’s mine: Millennials are financially jinxed, suffering from recession fatigue, attitudes of entitlement and a lack of financial education, but time is on their side.
Dear Cheapskate: My son graduated from college three years ago. He has a job, but he is struggling financially with student loans and credit card debt—and still living at home. I know with smarter choices he could pull himself out of this. He has asked his father and me for help. We want to be good parents and provide for him. At the same time, we also think that since he’s an adult, he must start caring for himself. Is there any compromise?—Debbie, Illinois
Dear Debbie: I have two grown sons, so I can relate. Since your son has asked for help, this might also be the perfect time to teach. Don’t just give him a handout. Help him set up a budget. Like so many people, it’s possible he has never learned how to manage a paycheck! That is the most basic first lesson in practical personal finances. Because he has come to you asking for help, he may also be open to receiving your guidance. He needs to be accountable but not in a child/parent way.
Think of this as more of a client/counselor relationship. In the same way he would have to create and submit a business plan to get a business loan, have him create a personal finance plan for how he intends to use the money you lend to him, how he intends to manage his income each month, and how he plans to pay you back.
It’s time for your son to get real about his money, and this could be the perfect opportunity you need to teach him valuable lessons.
Not sure how or where to start? Pick up a copy of my book “7 Money Rules for Life: How to Take Control of Your Financial Future.” It'll teach him everything he needs to know to manage his income now and for the rest of his life.
Dear Cheapskate: I’m looking for a new job. My current employer offers great benefits and even pays for my health insurance. Since I know this probably won’t be the case at a new company, I’m worried any new out-of-pocket payments I'll have may offset a salary increase. How do I include these sorts of things when coming up with salary requirements?—Dan, California
Dear Dan: Most employees would be shocked to see what their benefit packages are worth in dollars and cents. If you have a good employee compensation package that includes health, vision and dental insurance, paid vacation and sick leave, consider that to be worth at least 30 percent of your gross income.
Before you leave your current position, do your homework. You know what your paid vacation and sick leave are worth. Get three quotes for health insurance that are similar to the coverage you have now. Come up with an annual dollar figure that reflects your current benefit package.
Seeing in black and white what your current benefits are worth will be a valuable exercise whether you make the change or not.
Dear Cheapskate: Recently I received an inheritance from a distant relative. I'd like to use it to pay off my car loan. I have about eight payments to go, and the thought of not having that monthly bill is really appealing. But then my dad said I wouldn’t save anything and that there are better ways to spend the money. Is he right?—Sandy, Arizona
Dear Sandy: It all depends on how your car loan is structured. If it is a simple interest loan (typical), each month you pay interest on the outstanding balance. You will avoid eight months of interest if you pay it off early. Even if you have a loan where you agreed to pay a set amount of interest (not likely), you won’t save any money, but there’s still a big emotional payoff for early payment. There’s just nothing like a $0 balance!
Here’s an idea: Use the windfall to pay off the balance. Then commit to keep making those eight car payments, but make them to yourself. In eight months, you will have restored the windfall, saved some interest and have a paid-for car, too.
