As I write this newsletter, my 18-year-old son is in the next room, ostensibly packing for college, which starts next week.
We’ve had many talks about money this summer. In the past few months, he has applied for his own credit card, opened up a bank account, shopped for food and researched auto insurance. (He wants a car.)
And while I appreciate the efforts, the truth is my son will be relying on the Bank of Mom and Dad for the next few years. Which begs the question: At what age should American kids become financially independent?
The answer is that the harsh reality of a complex modern economy makes it hard to figure out.
“No doubt it is more expensive than ever to be a young adult,” says Ted Rossman, senior industry analyst at financial information site Bankrate. “Household formation costs are very expensive, college is very expensive – everything costs more. I have a lot of empathy for people who are just starting out.”
That said, the typical age of financial independence should be between 20 and 23 years old, according to a Bankrate survey.
Break the numbers down by cost category and differences of opinion can be pretty wide. For example, people expect young adults to cover bills like cell phones, credit cards and car payments and insurance by age 20. But other costs, like health insurance and student loans, are not expected to be handled solo until age 23.
There are best practices to set your kids on the right financial path, especially since this is an emotional area where wrong moves could create lasting damage.
If you have a teenager or twentysomething, let me know if and how you’re helping them financially. Write to me at lauren.young@reuters.com.
