Years ago it was common for children to move out and get a place of their own right after they turned 18, or maybe around 22 if they went to college. But times (and costs) have certainly changed over the years, making it difficult for young adults to move out and get a place of their own. So, most people would agree that young adults can probably use all the time and help they can get from their parents for as long as possible nowadays.
Rents and house prices aren’t cheap. Then of course there’s the price of food and utilities every month. And if they went to college, they probably have loans they need to pay off… which is why so many young adults live at home for a lot longer than people used to.
But at some point, they have to move out and get a place of their own. And doing that is difficult if they haven’t been put in a position to prove they can handle paying for a place of their own! Whether they’re dealing with a landlord, or a mortgage lender, they’ll need to be able to show some proof that they’re financially responsible.
So here are a few things you should encourage your kids to do as early in life as possible (within reason!), so they can get a place of their own when the time comes:
1) Earn money they can prove
Odd jobs like babysitting, or doing yard work for neighbors might put some money in their pocket, but it’s also easy to not claim on a tax return. Getting jobs that put them on the payroll and give them an actual paycheck will make it easier for them to prove their income to creditors, mortgage lenders, and landlords. If they get a job that also provides tip money, they should avoid the temptation to fudge the numbers on their tax returns; it might save them a few bucks in taxes, but it will also make it look like they earn less than they actually do, which could affect how a lender or landlord assesses them.
2) Establish credit history
Bad credit isn’t good, but having no credit history isn’t much better. It takes time and a few creditors for a credit report to show that a young person has been given credit in the past. If a lender or landlord sees that they have no previous credit, they’re not likely to want to be the first to take the risk with them.
Have your child open some credit cards in their own name, buy a car, and rack up some monthly recurring bills (like a cell phone in their name) that get reported to credit agencies.
3) Be responsible with their credit
Once they have credit cards, they should use them regularly without maxing them out, and make timely payments each month. When they buy a car, they need to make sure to not miss a payment, and certainly not let it get repossessed. Not only is this good for building their credit history and score, but it also teaches them to handle the responsibility of having bills to pay, and staying within their budget each month.
Doing these 3 things will go a long way in making it easier for them to move out on their own when the time comes. (But don’t be surprised if they ask for a little help with the downpayment on their first house!)
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