Greensboro, NC -- Matt Logan, a certified financial planner with Matt Logan Inc. & Summit Brokerage is answering question about emergency funds and also how recent high school and college grads should handle finances.
The Emergency Fund
You should definitely have an emergency fund. How much you should have can be a little tricky. I take into account your pay structure from your job and your job stability as well as how much you make. I would say that a good starting amount to have would be 3 months of your take home pay. This needs to be kept in a cash equivalent. I usually have people keep this amount in a savings account at their bank.
Financially Responsible: From HS To College
I have three things to point out. First, have your child get a part time job during college. It will help them transition easier into the work world and typically helps them graduate sooner. Second, discuss the financial obligations openly with your child. Let them know how much you are spending per semester and what their budget is. They should have their own accounts and also begin using credit. This will promote a more financially aware adult. And third, make sure they know that college is a means to an end and not a destination. The kids who think it is a destination ends up staying there. Promote long term goals and dreams for your child so that they know that the end result should be employment and financial independency.
My College Grad Just Moved Home...Now What?
I would take this on a case by case basis. Your child should be required to have some sort of employment even if they are severely underemployed. I know that my mother made me pay rent after 90 days of living with her post college and while I did not think that was great at the time, I now see the logic. It should not be overly comfortable for them to live with you and be unemployed. I have also seen parents in this situation charge their children rent and put it in an account to give back to the child as a down payment on a home.