When Generations Collide: How to Cope When Adult Children Move Back Home
Difficult economic times and a tight job market have sent an unprecedented number of adult children back home to live with their parents. A 2010 Pew Research Center study showed 21.6 percent of adults aged 25–34 were living in a multi-generational household. Welcome to the Boomerang Generation.
There are a lot of factors at play when adult children move home, say personal financial planning experts at the Virginia Society of Certified Public Accountants (VSCPA). Most parents want to help their children out, but there can be long-term financial implications and other challenges when adult children move home. Establishing ground rules up front will help everyone live as peacefully as possible.
To get started, here are a few things to think about and discuss in terms of living arrangements:
- Length of Stay. In all honesty, your returning child may not know exactly how long he or she needs to stay with you. Setting a mutually agreed-upon goal, such as six months, to get new living arrangements organized, will help everyone move forward with an understanding of timing. Reassess and redefine your agreement as time goes by.
- Rent. Will your child be paying rent or not? If assistance towards rent/mortgage, utilities and food is necessary, decide how much and how often. If your adult child isn’t working and can’t pay rent, consider bartering the rent for extra household chores.
- Household Chores. Laundry, yard work, cleaning, cooking — outline duties for each person. Everyone should contribute.
- House Rules. How will overnight guests, parties, loud music and after-hours entrances and exits be handled? You’ve shifted from a parent/child relationship to an adult/adult relationship. Make sure expectations are addressed.
The key to coexisting peacefully? Avoid reverting to the behavior each of you had when your adult child was a teenager. All conversations regarding money and living arrangements need to address the reality of today’s financial situation.
Financial Matters Matter
Hammering out the house rules may be the easy part. You also need to talk about the financial rules of moving home. Because while you naturally want to help your offspring when they’re in a financial jam, you don’t want to jeopardize your own long-term financial security. A recent survey shows that nearly 70 percent of baby boomers said they have helped an adult child with college loans, and more than 50 percent said they helped with an auto loan or allowed adult children to live at home rent-free.
If you are offering financial assistance, put some parameters on that assistance. For example, your adult children should be actively looking for a job or volunteering so they are continuing to add to their resume. Allowing them to sit around the house isn’t going to benefit anyone.
You also need to address how much you will lend and when it will be paid back. Some parents may choose to charge interest, some may not. Either way, if the loan isn’t repaid per the agreement, no further loans should be made.
A CPA Can Help
Yes, money can be a touchy subject, but it’s not out of line for you to talk to your adult children about their personal financial situation. They might need some tips and advice to help get them on the road to recovery. Your expertise and experience is valuable.
Your CPA can also help. As a trusted, independent financial advisor, a CPA can provide the authoritative perspective that might get lost in parent/child communication issues. You CPA can help a child evaluate his or her financial situation, plan for a way to get out of debt, and develop a strong foundation for the future.
The most important thing is that you don’t jeopardize your own long-term financial future to help in the short term. Determine how much assistance you can afford to give, if any, and then stick to that. Otherwise, the tables will be turned and you could be financially dependent on your children a few years down the road.
Be sure to visit the VSCPA’s Financial Fitness website for great personal financial planning advice and tips for every stage of your life.