Have a child graduating from high school or college soon? Go ahead, pat yourself and your youngster on the back for a job well done. But with that diploma in hand, your next job is to help your child answer a huge question:


The question merits some serious pondering, because with issues like finances, career paths, lifestyle and family dynamics hanging in the balance, the answer is bound to have far-reaching implications on everyone involved.

Given all the factors that weigh into it, the decision about what comes next after graduation likely won’t come easily, either, said FPA member Timothy Knotts, CFP®, who speaks from experience, as the father of four children, including three currently in college. “This is new territory for your child,” said Knotts. “It’s our role as parent or guardian to guide them and to help them ask the right questions they don’t know to ask.”

Wondering where to start? Try these suggestions from financial planning professionals.

FIRST...As with many rites of passage on the road to adulthood, the post-grad decision-making process starts with an in-depth parent-child conversation or series of conversations, said Knotts. This is when to put all the “real-life” adult responsibilities, issues and expectations on the table: What living expenses will the graduate now be responsible for covering, and how will he or she earn money to cover them? Where will the graduate live — on their own or at home, and if it’s the latter, for how long, and will they pay room and board? If so, how much?

SECOND...The next step, said Knotts, is to sit down and develop a spending plan (a budget) with the help of an expense worksheet, such as the one available here. This can be a real eye-opener, especially for kids who haven’t previously paid for things like utilities, cell phone, automotive expenses and housing.

Now that the numbers are in front of you, it may be time to discuss short-term parental financial support: will there be any, and if so, how much and for how long? If not, how will the graduate make ends meet?

THIRD...With a solid idea of what monthly expenses will be, it’s time to weigh job possibilities — the income side of the equation. What fields interest the graduate? What opportunities are available in those fields? What do they pay? Where does the graduate want to live and work? What’s the cost of living in those places? The answers to these questions are as much about personal priorities as they are about practicalities, according to Knotts. “There are pluses and minuses that are non-financial. Sometimes it’s a matter of, ‘Should I pursue the really cool job that pays very little or one that pays the bills but isn’t as interesting?’”

FINALLY...Parents/guardians need to re-examine their own financial standing, particularly in situations where a child’s graduation from college means no more five-figure tuition bills. What will you do with that “extra” money? “Some people in that situation tend to go a little crazy, spending on material things,” observes Knotts. “But caution is always the right approach here. Before you go out and start spending, sit down with a financial planner and do a retirement needs analysis. Because instead of a five-figure annual college education commitment, what you’re probably looking at is a five-figure annual retirement savings commitment.”


Print this page
Find a planner