woman and mom looking at computer

A recent survey found that the majority of Gen Z and Millennials want to break out of working for someone and run their own business. The potential to “control their destiny” is the main motivation, and that makes plenty of sense. But it has to make financial sense too.

I have a few rules for you and them.

The main rule for parents and grandparents is to not offer financial assistance unless you are 100% sure you can afford to give that money. Remember, a gift (or even a loan) needs to be generous to the giver as well as the recipient. Giving a child or grandchild money that comes out of your emergency savings is not generous to you. Nor is reducing your retirement contributions or bypassing other important goals, such as long-term care insurance.

Now the advice for your kids.

  • Don’t cash out your retirement savings.
  • Don’t run up credit card bills that will then charge you 22% or more on unpaid balances.
  • Don’t go without health insurance. I don’t care how young and how healthy someone is. One serious accident will be a financial disaster without insurance. And yes, even young people can get sick. Price out coverage through the Affordable Care Act (https://www.healthcare.gov/) and have a plan for being able to cover the monthly premium cost. 

Think I am being too careful? Just the opposite. My advice is designed to increase the chances of success. Starting a business is risky enough. No one should pile on more risk by taking on additional financial risk, whether it be depleting their retirement savings or running up expensive credit card debt.

And this isn’t about not chasing a dream. It is about planning for it. Spending a few years saving up so you have the money set aside to cover living costs (and your health insurance premium) when you do launch. And if it works for your family, maybe living at home can be a way for them to save even more. I still want them to help you with household costs, but it will still be less than a place of their own. And that’s a big way you can help.

 

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