What to Do If Your Adult Child Is Moving Home
According to a recent Reuters article on adults moving back in with their parents, the U.S. Census Bureau reported the number of adult children (those over 18 years of age) living with their parents increased to 15.8 million total between the years of 2007 and 2010. Perhaps more alarmingly, the majority age group that accounted for these numbers was the 25- to 34-year-olds.
Given the rough economy since the bank industry’s meltdown in 2008, these numbers shouldn’t bee too surprising, but they pose an interesting dilemma — how much support are these parents obligated to give their children? While many parents fund their children’s college expenses and health insurance until they age out of the policy — even when the kids are no longer at home — this article examines what other financial aspects that parents of adult children living at home must take into consideration when presented with these unique living circumstances. (See also: Re-Nesting: Tips for Moving Back in With Your Parents)
Set Basic Guidelines
First things first — draw up a contract and set some basic guidelines for what is expected of your child if they are moving back or currently living at home. Detail exactly what chores you’d like them to do, what their curfew is (if any), what expenses are covered by you and what expenses are to be covered by the child. Let them ask questions so both parties are perfectly clear on what’s expected of each, minimizing the hassle of living together beyond the usual birth through 18 years.
The Issue of Rent
Should the child pay monthly rent and utilities or not? This decision is ultimately a personal one on the parents’ part; some people will want to wean their child off their wallets as quickly as possible, and others would rather the child save up money so they can move out sooner. Some families agree to let the adult child live rent free if they’re in college or saving for a down payment on a house. If they have a job and could be comfortably living in an apartment, however, it may be wise to charge rent (otherwise, they’re likely just there to mooch). For most parents, an adult child going through rough financial times shouldn’t be penalized as long as they’re earnestly looking for work, but again, it comes down to a matter of personal decision. You as the parent probably don't want an occupied nest going into your retirement years, so while it's good to help your kids lower their cost of living, you may need to apply a little tough love if they overstay their welcome.
Will it be a fridge free-for-all, or should adult children cover their own meal expenses? Sometimes it’s a mixture of the two, where they’re allowed to eat dinner with the family but required to pay for their own food and meals away from the dinner table. Perhaps they can offer to cook in exchange for access to the pantry and refrigerator. The downside to open access is that they may be tempted to raid the family food storage to cut back on their own food-related expenses, so asking for a monthly contribution for grocery expenses might be in order.
What about phones, insurance, transportation costs, etc.? There ought to be a balance — adult children shouldn’t be completely dependent on their parents, but if they’re struggling to find a job, they might not be able to afford all of the expenses that come from living on your own in the real world. As the parent who has already raised them for 18 years, you are not obligated to cover any expenses. However, you may decide to pick and choose which expenses to cover and which ones to let your kids handle. Generally speaking, entertainment expenses such as movies, alcohol, clubs, etc. ought to be covered by the child (just make sure they’re not spending all their money on entertainment while they could be paying you rent or saving up to move out sooner).
If paying for extra expenses on a regular basis isn't a good fit for your family's situation, consider giving practical birthday or holiday gifts, such as gas cards or offering to pay for cell phone bills for a year. This way, your child can retain most of their independence yet still cover some costs they might otherwise not be able to afford on their current paycheck.
There are, of course, other ways to support your adult children other than merely letting them crash at home rent-free. For starters, loans can be a great way to help your kids get back on their feet without the risk of ruining their credit or depleting their financial resources with exorbitant interest rates. Going this route would definitely demand a contractual agreement to protect yourself in the case where they may not feel obligated to pay off the loan within a reasonable timeframe because you're likely not as strict or demanding as a credit card or lending company. Be sure to include: the date of loan, the amount loaned out, interest rate (if any), payment schedule, expected date of full payment, and of course, signatures from both parties.
What about you? If you are an adult living with your parents or have you adult children living with you, how does your family approach this situation? Let us know in the comments below.