Monday, November 26, 2018

Cutting the Cord: The Financial Side of Growing Up


A moving truck recently came to my house, but I didn't go anywhere.  My daughter did though.  Several months ago she and two friends signed a lease on a house. 

As parents move toward retirement, our kids move toward independent lives, but there are often ties that still bind them financially to their parents.  Let's take a look at some of them, and consider what to do with them.

Health Insurance

Since the passage of the Affordable Care Act, young adults have been allowed to remain as dependents on their parents' health insurance policies whether or not they live with their parents or elsewhere, whether they are married, or whether they are eligible for worse coverage with their own employer.  My employer charges a single fee for children's coverage, whether I have one child or ten.  Since I have to insure my younger daughter anyway, keeping Ms. Moved Out on my policy does not cost me more, and my coverage is better than her employer offers.  I guess I could charge her for her share, but I'm a nice mom.

Car

Who owns your young adult's car?  Depending on when it was bought and with whose money, it could be owned by the young adult or by the parents.  If your child's car is in your name, move-out time is a good time to re-assess that.  Yes, it is going to cost to change the title, and some states will make the new owner pay sales tax, even if the car is given rather than sold, but once your child moves out, you will have no control over the car and as long as it is in your name, you can be held liable for any accident.  

While it is generally cheaper to buy the same amount of coverage as an additional vehicle on a family policy, if you have a substantial policy because of your substantial assets, your adult children who have no savings, student loans and cast-off furniture can generally get by with lower limits. so their overall insurance costs could drop by assuming ownership of their own vehicle. 

Bills

Who is paying the young adult's phone bill?  If it is you, do you want to continue to do so?  The family plan may be the cheapest way to finance multiple phones but as the kids move out, consider other options.  Maybe they can pay their share of the bill.  Maybe now that your text-happy teens are gone, the old fuddy-duddys at your house would be fine with pay-as-you-go plan--or maybe not.  

What about the Netflix bill or the Spotify charges?  Do you use those services, or are they really for your adult child?  Are there any other services you are paying for (check your credit card bills for those auto charges) that you won't need or want once your child(ren) move out?

Kids moving out is a bittersweet time for parents.  It is what we want to happen.  It means we did our job and raised independent adults.  Still we miss having them home with us.  

2 comments:

  1. I am on my daughter's cell plan. They were tired of my pay as you go!
    We help out both families with groceries and cooking when we visit (and babysitting). Both kids got a used car when they left home--and their own insurance (which our son let lapse and then ended up falling asleep at the wheel - ending up in a farmer's field.....). We paid for our daughter's wedding and spent the same on our son's honeymoon. I help with Catholic school tuition--which is wicked expensive up here.
    There is an agreement that we will probably live in a granny pod or apartment with our daughter's family when the time comes---but we, hopefully, are a long way away (but my husband turns 70 in 18 months....) Then the bills may be on the other foot???
    They are all independent, yet we are attached in many ways.

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