Don't Give Your College Graduate a Free Ride

Rules, rules, rules

Financial adviser David Latko, author of Everybody Wants Your Money, says parents getting this call must insist on "rules, rules, rules." Here are a few of his:

• Create an "exit strategy" by determining how long a child may live at home or receive your monetary support.

• Establish a dollar limit at the Bank of Mom and Dad. Once that maximum amount is reached, no more money will be given until the original amount is repaid.

• Create a signed, notarized contract when lending money so that loans do not become gifts if a child gets married or divorced or if a death occurs.

Period of adjustment

Fifty-one-year-old Thomas Stock of Crystal Lake, Ill., is adjusting to his oldest daughter living at home again after her graduation from the University of Illinois. For now, Caitlin has the temporary use of a family car as she begins a sales job with a technology company.

"I told her, don't worry about rent," says Stock, a financial adviser. "Get a car. Make that payment. But — and that's a big but — I want to see some savings. I don't want to see her partying all the time."

His generosity may also have a time limit. "I am thinking in six months let's reevaluate and see how it is working for everybody," he says.

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Andrea Downing Peck is a Bainbridge Island, Wash.-based journalist who writes about family issues.