WHEN PLANS GO AWRY:
INTRODUCING THE BOOMERANG GENERATION

We’ve been talking here as if you have made a successful transition from school to the workforce, with a decent salary, a place to live and the upward mobility we all expect at this time of life. It may not happen, though. A tight economy can make it tough to find a job. Or maybe you haven’t found the necessary focus to land gainful employment (you’ve been slacking, in other words).

Let me tell you a story about my early post-university days. I thought I had a job lined up for at least the summer following graduation, but I learned just before school ended that it had fallen through. I moved back home. I applied for many jobs, got some interviews and was offered a few things that I turned down. All the while, my parents were supportive without being patsies. On the whole, I think they were happy to have me back at home after being away at school.

Aside from a little freelancing here and there (I wrote something for a sporting goods magazine on the latest in ski equipment, even though I had never been on skis in my life), I was unemployed from April through the summer and into the fall. Then, after checking in with the employer I thought I had a job with before graduation, I was offered a temporary position. I took it, moving out within a few weeks, and my life as a working adult began.

My point here is that a little parental support at a key moment can help position you for a lifetime of success. If it happens that you need to move back home, you can at least tell your parents you’re not unique. In fact, there are enough young adults in this position that a catchphrase has emerged to describe them—the Boomerang Generation.

Boomerang kids left home, stayed away for a while and now are back.

The boomerang phenomenon gained notice during the recession that ended the last decade. Better economic times may put this catchphrase to rest, but that doesn’t mean parents won’t have to make boomerang decisions like:

• Whether they should charge you room and board. This is totally discretionary on their part. If they feel you’re a responsible, financially savvy, ambitious kid who has hit a patch of bad luck, then maybe they won’t see any need to charge you room and board. If they think you could benefit from the structure of paying for accommodations, they may decide to arrange a monthly payment. Still another possibility is that you move back home to save money for the purchase of a house or some other savings goal. Here, it’s totally a judgment call about whether to charge you for accommodation.

• Whether to provide some day-to-day spending cash. Personally, I wouldn’t mind spotting my hard-up kid a bit of money here and there to enjoy a social life. Providing, of course, that he or she was working overtime to find a decent job.

• Whether to push you to take any job you can get. A career-minded graduate with decent credentials and a focused job-search approach should not be encouraged to take anything that pays a salary. We’re talking about career-building here, not casual or part-time work. The day may come, though, when your parents have to say it’s time to find some gainful employment of any type.

I BELONG TO THE BOOMERANG GENERATION
(AND I CAN TAKE IT OR LEAVE IT EACH TIME)

Apologies for appropriating Richard Hell’s nihilistically poetic song “Blank Generation,” but it seemed relevant to the much newer Boomerang Generation. Media coverage of this demographic seems to tilt toward the perspective of the unfortunate parent, as in the young ’uns have left home to go to college or university and it’s not natural for them to come back. Well, no kidding. Very few twentysomethings want to move back home after a period away at school. Back to your little room, with your little bed and the big-boy desk your parents bought you when you were five. Back to your parents knowing when you leave and when you get home (and with whom). Back to sharing bathrooms with siblings and doing household chores you thought you were off the hook for until you bought your own home.

HOTLIST:
HOW TO HANDLE THE ’RENTS IF YOU HAVE TO MOVE BACK HOME

As undesirable as it might be for you to move back home, it’s a very real possibility in today’s highly competitive and specialized job market. Here are some suggestions on how to handle the financial aspects of moving back with your parents:

• Be an adult. Rather than just announcing your imminent return engagement chez parents, tell your mom and dad that you are having cashflow difficulties and would like to discuss the idea of moving back home for a while.

• Have a plan. Tell your parents what you plan to do to find work, and how long you estimate it may take. Make it clear you’re building a career, not looking for hours at Tim Hortons.

• Offer to pay. Figure out how much you can reasonably afford to pay for your room and board and make the offer. Best case, they tell you, “Thanks for offering, but that’s not necessary.”

• Contribute in a non-financial way. Shovelling snow, cutting grass, doing dishes and taking out the garbage are ways to offset the extra costs your parents are incurring (like groceries, for one thing).

• Contribute in a financial way. Buy the groceries one week, send your parents out to dinner, buy them Leafs TV for a year.

• Keep them updated. Get out in front of all the questions your parents are inevitably going to have about what you’re doing to find work and how things are going.

Understand that they’re not trying to hassle you; rather, they’re concerned and want to see you moving on to the next steps in life.

• Accept advice. Hey, your parents have probably been in the workforce for a few decades. They may have some legit ideas about finding a job.

TOUGHER ECONOMIC TIMES?

Back in late 2010, Maclean’s magazine ran a cover story with the headline “Generation Screwed: Lower Incomes. Worse Jobs. Higher Taxes. Bleaker Futures. What Boomers Are Leaving Their Children.” I think Maclean’s was on to something.

First, though, let’s acknowledge that people were still feeling the after-effects of a global financial crisis and recession at the time that piece appeared. Pessimism was trendy; optimism was scarce.

But even if you discount for passing gloom, there are still trends at work that will make it harder for today’s young adults to enjoy the same economic success as their parents. For one thing, older workers are staying in the workforce longer. Statistics Canada has reported that between October 2009 and October 2010, the fastest rate of employment growth was among workers aged 55 and over. At the same time, there was an offsetting decline in employment for those aged 25 to 54.

Another factor is the alarming state of government finances. As politically toxic as tax increases are, it’s hard to see all levels of government balancing their budgets without raising taxes. Cuts in government services are likely as well, regardless of whether taxes rise. Translation: you’ll quite possibly have to pay more for things like a university or college education and health care.

I raise this discouraging outlook for one simple reason— as context for discussions parents and their young adult children will have as they consider the issues covered in this chapter. The Boomerang Generation: defined by necessity, not by choice.

Copyright © 2012 Rob Carrick. All rights reserved.

Top Banking Blunders

• Racking up excessive ATM fees. Believe it or not, it wasn’t that long ago that you could dip your bank card into any bank’s automated teller machine and make a no-fee withdrawal. Today, you can pay upward of $1.50 on the spot to use another bank’s ATM, and quite possibly another $1.50 network access fee from your own bank later on. Avoid the no-name ATMs that you see in stores, sports arenas, etc.—they always charge you for access.
• Paying bills in the branch. Pay bills online and it’s a free transaction with most bank account packages; venture into a branch to have a teller handle the transaction for you and you might pay $1.50 for the service.
• Last-minute bill payments. Online banking seems instant, but money you move around using your bank’s website may take twenty-four to forty-eight hours to get where it’s going. So if your credit card due date is November 15, don’t pay it on the fourteenth. Also, the weekend is a dead spot for money being moved electronically. If you pay a bill on Saturday morning, your bank doesn’t start processing it until Monday.
• Careless bill payments. A misplaced decimal point can be costly when paying bills online, so carefully review each payment before submitting it. Check the date as well, and ensure your account number is correct. Note: You should be able to have a bill payment containing an error called back if you contact your bank immediately by phone.
• Not reading bank statements. If you believe banks are infallible, then there’s no need to read the monthly account statements. My experience is that errors do happen, and that they’re usually fixable if you bring them to your bank’s attention. It’s a virtual certainty your bank will never come to you to admit an error, unless it involves money being mistakenly deposited in your account. Note: Banks are increasingly offering account statements online, which is a great option not only because it saves paper but also because the statements are archived online and thus easy to store and refer back to when necessary. Be especially vigilant with bank accounts you don’t use a lot. I’ve heard of cases where fees have mounted up for months on end before the accountholder noticed and put a stop to them. Checking your account often online is another way of making sure everything’s okay.
• Being careless with your bank card PIN. You are virtually bulletproof against theft or fraud involving unauthorized use of your bank card, provided you have taken reasonable precautions to keep your username and personal identification number private. Don’t disclose these passwords to anyone, and never write them down anywhere where a thief who has stolen your bank card might come across them (like on a slip of paper in your wallet or, worse, on the back of the bank card itself). Your bank will have zero sympathy for you if your account gets cleaned out and there’s reason to believe you were lax with password security.
• Being careless about online banking on shared computers. Bank websites use 128-bit encryption, which makes it highly unlikely that anyone is going to intercept your personal information while you’re banking online. But there’s an additional security risk of leaving personal information on the computer after you’re finished your banking session. If it’s your home computer, you should be okay. But if it’s a computer at work or in an Internet café, then it’s conceivable that someone could end up seeing some of your personal information. Avoid shared computers for online banking, or if you must use one, clear the browser’s cache memory, cookies and history when you’re done. And of course, make sure no one is looking over your shoulder when you type in your username and password.
• Getting sucked in by premium bank account packages. Premium bank accounts can cost as much as $20 to $25 per month, and they’re never worth it despite the perks thrown in. Watch out for the bank sales pitch—it usually involves flattering descriptions of you as a serious player who needs a higher level of banking services.
• Expecting the bank to tell you about its best deals. It’s not unheard of for a banker to suggest a better, cheaper way of doing things, but plan to look after yourself when it comes to getting the best deals on banking. If you’re ringing up lots of fees and paying lots of interest, that’s revenue for the bank.
• Neglecting to use your last resort in a dispute with a bank. All banks have their own internal ombudsman, a person who investigates customer complaints that haven’t been resolved by front-line bank staff. If you still can’t get any satisfaction and truly believe you’re in the right, then escalate your complaint to the Ombudsman for Banking Services and Investments (OBSI) at www.obsi.ca.
• Getting phished. Phishing is the process whereby online fraudsters try to fool people into logging into a fake version of an online banking website, thereby disclosing their username and password. This is usually accomplished through what can be amazingly realistic-looking emails apparently sent by a bank’s security department.

The email asks you to log into your account—when you do, your private information is no longer private. No bank will ever send you an email telling you to log into your account. Ever. Ergo, all emails from banks about security matters are dangerous fakes.

Copyright © 2012 Rob Carrick. All rights reserved.

This is an except from my latest book, How Not to Move Back in With Your Parents: The Young Person’s Complete Guide to Financial Empowerment.

From Chapter Seven: Buying  Houses

Three Money Myths About Houses

• Houses are always a good investment. People usually say this after a stretch of years in which house prices have soared, just as they get excited about stocks after a few good years for the markets. Houses can be a good investment, but a lot depends on when you buy and where you buy. Big, growing cities are better than small industrial towns in decline. That said, you can lose money in big cities, too. When my wife and I were looking for our first home in Toronto back in the early 1990s, we viewed several houses put on sale by people who had paid top dollar in the late 1980s and then watched the value of their home plunge below what they owed on their mortgage. Between April 1989 and February 1996, the average resale home price in Toronto fell to $192,406 from $280,121, a drop of 31 per cent.

• It’s smart to buy as much house as you can afford. Building on the previous myth, this old bit of nonsense is based on two often erroneous ideas: one, that bigger houses are always better; two, that your house will become more affordable over time (ignoring such matters as slow wage growth, inflation and the cost of having kids).

• Your house will pay for your retirement. The thinking here is that you’ll sell your house for a big whack of tax-free money (you generally pay no tax when selling your principal residence), carve off a piece to buy a condo or a cute little bungalow and then invest the rest to pay for a carefree retirement. The flaw in this plan? So many people have done this that the price of condos and cute little bungalows has soared. You’ll probably have some money left over when you sell the family home and downsize, but it won’t be a big factor in your retirement savings.

Copyright © 2012 Rob Carrick. All rights reserved.