The best ways to support a new graduate — without ruining your finances

NEW YORK, June 9 (Reuters) – The Class of 2026 is officially entering the workforce, leaving many parents — including this one — wondering how to launch recent graduates financially.

What is the best way to give your kids a strong start without sabotaging your own future? Should you keep them on the family health insurance plan? Is it okay to offset rent costs in expensive cities? How long should you pay a child’s monthly cell phone bill?

According to Intuit’s Life-ing Repor, t, 85% of recent graduates say they wish the financial struggles they will face in their 20s were discussed more openly. And more than half the Class of 2026 also say they are the most overwhelmed they’ve ever felt in their ​lives, with top financial stressors including covering necessities like housing and groceries (27%), becoming financially independent (22%) and paying down debt (22%).

To map out how parents can responsibly support new graduates while establishing healthy guardrails for independence, I sat down with Tara Popernik, head of wealth planning at LPL Financial in New ‌York.

Popernik breaks down the rules of family gifting, the danger of taking financial advice from TikTok and why the path to financial freedom always starts with a parent’s own budget.

This interview is edited and condensed.

First and foremost, as a parent, you have to have your own financial house in order and figure out what level of support you can afford. That may mean sitting down with your financial adviser and thinking through: Are there trade-offs here? If I provide my kid with some rent assistance, the down payment on a car or some ongoing support so that they can make sure that they’re contributing to their own 401(k), does that jeopardize me and my retirement in any way, shape or form?

Secondarily, it’s just thinking through ​what support is needed and then being really clear with children around expectations for what that support is. Support can take the form of staying on the family’s health insurance plan or the cell phone plan or keeping the streaming service access. But it can also be a little bit more involved — a security deposit ​on an apartment, co-signing on a lease, helping with rent, buying furniture or a down payment on a car.

It really is family-by-family, and it does not have to be ⁠all or nothing. Parents can offer some assistance while still trying to really encourage that independence, but establish clear guardrails. Those types of guardrails really encourage financial independence and future positive habits when it comes to money and thinking for retirement and beyond.

“Fairness” is a massive point of friction in families. How do you handle a situation where one sibling ​makes a big salary and another chooses a lower-paying career, like a speech pathologist or teacher?

The question of fairness comes up a lot. I see some families opt for, “Well, we’re just going to give all of the children the annual exclusion gift equally, and they can opt how to spend it based on their own circumstances.” In other families, you might have ​one kid who’s going into investment banking and making an outsized salary and another child who’s pursuing something that they’re passionate about.

Sometimes it is having a family meeting around: “Look, here’s the money values that my co-parent and I have tried to impart into all of us.” And maybe it is even asking the questions, “What were the money messages you heard from us around the dinner table as well?”

It may be part of your value system as a family to both help the world, but also be productive members of society. And parents may need to communicate that when there is a disparity, they will pitch in a bit in order to help a child who is trying to get established in their chosen profession.

For high-net-worth parents, one thing is the gifting rules. They can’t provide the child with too much support without potentially triggering the size of a gift that would need to be disclosed on a gift tax return.

Each individual parent can give each individual child up to $19,000 this year as an annual exclusion gift without any gift or estate tax implication. ​Double that if you have two parents, so $38,000. Grandparents could also give that amount. That $19,000 adds up pretty fast if grandparents are also giving. You may end up with a relatively swanky lifestyle as a recent grad if you get all those annual exclusion gifts.

There is a lot ⁠of value that new graduates might be leaving on the table if they’re not participating in employer-based plans. First and foremost, an employer match for retirement is very valuable. So if they’re going to contribute, they should contribute at least up to the employer match level.

As a parent, you can also say, “Hey, I will provide you $6,000, so that you can make a contribution this year to your own Roth IRA,or I will provide you with enough funds, so that you would be able to have a little extra spending money if you’re going to put into your own 401(k) to get your employer match.” That can be a way to really incentivize children to start saving.

Because younger people are typically lower earners, the Roth option is often a great idea because once those monies are contributed, they are tax-free forever upon withdrawal.

I actually tend to advise this pretty early. When the child first goes to college, have them get a low-limit credit card and use it for maybe one thing on a monthly basis — ​like a gym membership or a streaming service — and then pay it off every ​month, so that child, starting when they’re 18 years old, has built that ⁠credit profile. When they’re in their early 20s, and they’re out in the world trying to get a car loan or get approved for an apartment, they have this profile built of, “I am someone who has responsibly used credit, and I’ve paid on time,” versus having stayed with the parent credit card the whole time or a debit card only.

I think it’s up ​to parents to really establish what those boundaries are towards getting to whatever that next step is — whether it’s applying to graduate school, or looking for at least a part-time role or an internship to try to get more experience. It’s all about ​the communication: “Here’s what we’re willing to help with, ⁠and here’s the point to which we’re willing to help.”

For some families, kids will need to be contributing to something in the household just to be in the habit of, “Hey, so much of my earnings goes to (paying a bill) on a monthly basis.” Or the parents can take that money, and say: “Okay, well, you’re going to pay us rent, but we’re putting it in a savings account for you to help you save towards that down payment on a house.”

It’s really important to find somebody who’s a qualified professional instead of looking at financial advice on TikTok. There’s just so much noise out there. An adviser, whether it’s the parent’s adviser or ⁠somebody who’s willing to work ​with young people for maybe a one-time planning fee, can be really helpful in establishing those early habits to put somebody on a great financial trajectory going forward.

I’ll tell you how my father did it. Every day from the time I was about 10 years old, he would come home and he would talk about how we were all going to get off of his payroll eventually. In fact, that was his phrase.

Starting those conversations early helps. Establish clear timelines for when you might need to pull back some of that support. At 26, in many ​states, you can’t be on your parent’s health insurance anymore. That is an expense that the child is going to have to pick up through an employer plan or on their own at that point.

To distill it down, parents need to be communicative and also judicious to set their children on the path to financial independence.