Set rules when your adult child moves in
Just when they thought they had completed the hands-on parenting phase of life, back home come their adult kids to blow up their finances.
When the backlash against young adults moving back home inevitably materializes, this is how it's going to sound: Parents are the victims, their kids the exploiters. Generation Y just can't get a break.
Census data from Statistics Canada shows that almost 60 per cent of 20- to 24-year-olds lived at home last year, as did 25 per cent of 25- to 29-year-olds. For decades, an increasing number of adult kids have been moving home for a period of time. Lately, the trend has been driven by high levels of student debt and weak job prospects for graduates.
Just how big a financial burden might these boomerang kids pose for their parents? For a reality check, let's consult with Christina Newberry, author of an e-book called The Hands-On Guide To Surviving Adult Children Living at Home and a blogger on her website, AdultChildrenLivingAtHome.com.
Just so you know, Ms. Newberry, 35, twice moved home briefly. While she believes ground rules need to be set when kids move home, she's supportive of the arrangement. "As long as everybody's expectations are the same, I think in most cases it's really quite positive," she said in an interview. "It's obviously a huge financial help to the adult children, and it can help them get established without necessarily creating huge costs for the parent."
Ms. Newberry talks about two layers of costs for parents, the first covering basic things like groceries, home heating and other utilities. I can give you some reverse perspective on these costs in my own home, which my 18-year-old son recently left to attend university out of town. We're saving a bit on food - nothing dramatic - and it's quite possible we'll save long term on our heating bill, at least the portion that went to the hot-water heater. Also, there are no more monthly overage fees on our Internet service.
The second layer of costs mentioned by Ms. Newberry is potentially more serious. It's when parents start covering extra costs for their adult kids, like cell phone bills, car insurance or car loan payments. "Often, the additional support for the adult child will come along with the move home," she said. "Things can get completely out of hand."
These extra costs can really bite if they affect a parent's ability to save for retirement. Ms. Newberry said parents might have to dip into their retirement savings, or divert money that would have otherwise gone into registered retirement savings plans or tax-free savings accounts.
Parents should discuss living costs with their adults kids before they move back home, Ms. Newberry said. In one way or another, she believes kids should make a financial contribution to the household. "The reason is not so much to make a real dent in their parents' costs. It's more about allowing the adult kids to feel like they're contributing members of the household, and for getting them into the pattern of handling monthly expenses once they move out."
Options for sharing the financial burden include charging full or token rent, or a percentage of costs like groceries and utilities. Parents can also insist kids save a certain percentage of their earnings. Kids who are jobless and don't have any income can take on household responsibilities, especially ones that might be costing the parents money. Examples: Lawn care and snow removal.
After talking about money, Ms. Newberry suggests a conversation about how long kids moving back home plan to stay and what their plan for the future is. "Every adult child's return to the home should have a purpose - whether it's finding a job, saving up some money after graduation or getting over a breakup."
On her website, Ms. Newberry talks about the stress for parents that can be caused when young adults move home. Beyond a stretched household budget, there's a higher incidence of arguments between parents and concerns about how the behaviour of an adult child returned home might affect younger siblings.
Gen Y, it costs your parents in more ways than one to have you move back home. Recognize that and offer to contribute some money or labour before you're asked to do so. Don't be a sponge - doing so just feeds a backlash against young adults who are forced to move home by today's hard economic reality.
The ground rules for moving back home: That's the topic of a discussion Wednesday on my Facebook personal finance page. Check it out at facebook.com/robcarrickfinance.