Set Up Your Grad for Success

Dear Carrie,

My 22-year-old son graduated from college last spring. Now he’s struggling to find a job—and I’m trying to figure out my role as he transitions to life in the real world. How can I help him find his footing?

—A Reader

Dear Reader,

You’re certainly not alone in facing this quandary. Whether you’re talking to other parents or reading the news, the consensus is that it’s difficult for today’s college graduates to find a job. That’s corroborated by the U.S. Bureau of Labor Statistics, which put the unemployment rate for recent graduates with a bachelor’s degree at 13.5% in 2011 (the most recent year for which statistics on this subset of graduates are available).1

But it’s not just a matter of unemployment; it’s also a matter of underemployment. A 2014 study by the Federal Reserve Bank of New York estimates that up to 44% of recent college graduates hold jobs that don’t require a bachelor’s degree.2 Before we jump to conclusions, we should realize that even though these unemployment and underemployment rates are higher than in the recent past, they’re not far off historical norms. As the Federal Reserve study also points out, it is actually quite common for young graduates to take several years to successfully transition into a meaningful career path.

The one thing that has changed significantly over time is how much an education costs. With the combined cost of tuition, room and board at some colleges topping $200,000 for a four-year degree,3 the sting of unemployment or underemployment is that much more acute. Even so, a degree is likely worth the investment—unemployment rates are about 50% higher for those without a college degree. 

The lesson is that the “real world” may look a little different than we—and our recent graduates—anticipated. Nonetheless, there are still some positive steps we can take to help them get a handle on their finances.

Make your support specific

There are a couple of ways to do this, and they should apply whether your son has a place of his own or is still living at home. (Having a young adult at home wouldn’t be  surprising. According to Pew Research Center, 56% of adult children ages 18–24 live with their parents.4)

Let’s say he finds a part-time job. First, discuss his expenses with him: transportation, food, clothes, entertainment, credit card balances, student loan payments, possibly even rent paid to you to cover his share of household expenses. Help him draw up a monthly budget and talk about what his salary will cover. Then you can consider supplementing his paycheck to help cover his essentials, provided you can afford to do so.

If your son is living on his own, be clear about how you will help support him. Ask to see his budget so that you know exactly where your money is going. You won’t be helping him achieve independence if you pay for everything.

Provide a savings incentive

Saving is one of the hardest things to do on a small salary, but still one of the most important. Encourage your son to open a savings account where he can sock away money for an apartment, a car or other goals. Also talk to him about the importance of having an emergency fund. As an incentive, you could offer to match a portion of his savings.

Once he’s earning some money, encourage him to take advantage of his 401(k) if his company offers one. If not, have him open an IRA. (Roth IRAs, which are funded with after-tax dollars and offer tax-free growth and earnings, as well as tax- and penalty-free withdrawals in retirement,5 are particularly practical for younger investors, who are likely to be in a lower tax bracket today than they will be in retirement.) Again, you might offer to match his savings, or contribute a certain amount with the proviso that he has to add a percentage of his own income every month.

A colleague of mine did this with her daughter several years ago and now has the pleasure of seeing her not only saving regularly, but managing a growing retirement account and handling her own investing. That brings me to the next point.

Lead by example

Share your experiences with money management and investing. The colleague I mentioned earlier helped her daughter get into investing by going over her own portfolio with her daughter and introducing her to some of the investing tools on is a great place to begin your son’s investing education. There you’ll find not only information and tools to help with budgeting and saving, but also a good introduction to investing concepts and basic portfolio construction.

Once your son has this information under his belt, you can help him get started with a broadly diversified investment like an index mutual fund or exchange-traded fund (ETF). With some seed money in his IRA, investing can come alive—and hopefully inspire a lifelong interest.

Use your connections

Ultimately, you have to have money to learn to manage it wisely. So if you have professional associations or friends in a field related to your son’s area of education and interest, don’t be shy about approaching them for help with your son’s job search. Today, with the majority of resumes submitted online and the competition numbering in the thousands for even the most entry-level jobs, a personal connection is invaluable. Even an informational interview can be an important learning experience and could open the door to future opportunities.

Provide advice—up to a point

Graduates should understand that they most likely won’t end up in their dream jobs immediately after collecting their diplomas. And we parents need to understand our kids’ employment challenges and be realistic about the difficulties and time involved in landing a job today.

I encourage you to talk openly with your son about his goals and your expectations. But ultimately, your son’s life is his own, and it’s appropriate for him as a young adult to make his own decisions. As a supportive parent, you just have to be clear about the limits of your financial support. That will help each of you transition into this new life stage—and may help each of you accept the ups and downs that are part of your child’s personal and financial success.

Carrie Schwab-Pomerantz, CFP®, is President of Charles Schwab Foundation and Senior Vice President of Schwab Community Services at Charles Schwab & Co., Inc.

Next Steps

Attend a branch workshop near you and receive a complimentary copy of Carrie’s latest book, The Charles Schwab Guide to Finances After Fifty (Crown Business, 2014). Reserve your seats at

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