According to the Pew Research Center, young adults between the ages of 18 and 34 are now more likely to live under their parents’ roofs than they are to live on their own. While moving in with mom and dad helps children pay off student loans and save money in order to eventually become financially independent, boomerang children also have the potential to put undue pressure on their parents’ future financial security. Following are some tips to help empty-nesters make their children’s homecoming a stress-free and successful venture.
Before agreeing to allow adult children to move back to their childhood homes, parents should discuss their expectation for the new living arrangement. This may include addressing issues of privacy and agreeing to a timeline of how long the child expects to stay in the home. Other topics may include expectations for children performing household chores, working outside the home and detailing what, if any household expenses the child should be responsible for paying.
Having these discussions and laying down ground rules from the beginning can make a move back home easier for both children and their parents.
Giving an adult child the family credit card or a handful of spending money on a regular basis is a recipe for disaster. Similarly, parents should think twice before cosigning for an adult child’s loan or taking out a loan themselves to help their children establish financial footing. Both decisions could jeopardize a parent’s own financial stability in the future.
If parents expect children to become financially independent, they must allow those children to bear some of life’s financial burdens. This can include creating a budget, paying expenses and living within their means. An employed child who moves back home should have the ability to pay for some, if not all of their own expenses, whether it be food and entertainment, clothing or gas and transportation costs. Similarly, parents may consider asking the child to pay “rent” and contribute some of their earnings to cover shared household expenses, especially when a child’s stay extends beyond a year or another pre-determined time limit. Remember, supporting an unemployed child or one who is just entering the workforce should be done with the end goal in mind: helping children become financially, emotionally and physically independent.
It’s very easy for an adult child to become comfortable in the pampered surroundings of a parent’s home. They may receive homemade meals and cleaning services free of charge and the freedom to spend their time enjoying recreational activities rather than the responsibilities of adulthood. Rather than being idle, children should establish a plan to work or look for work and earn money during the time they live in the family home. Similarly, when a child moves back home while pursuing a graduate degree, there should be some expectation for the how the child will spend time outside of the classroom. Perhaps the child has time for a part-time job or a full-time position with an employer who will pay some or all of the educational expenses.
Many parents have worked hard, provided for their families and sometimes struggled over their lifetimes to save enough money to enjoy their eventual plans for retirement. An adult child moving back home should not ruin a parent’s retirement plans. Rather, with the help of experienced financial advisors, parents may make minor adjustments to their estate plans without giving up on their dreams for a secure future.
About the Author: Brendan T. Hayes is a financial planner with Provenance Wealth Advisors, an Independent Registered Investment advisor affiliated with Berkowitz Pollack Brant Advisors and Accountants and a registered representative with Raymond James Financial Services. He can be reached in the firm’s Boca Raton, Fla., office at (561) 361-2001 or via email at firstname.lastname@example.org.
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Brendan T. Hayes is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC.
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