When my stepson graduated from college in December, he had not yet found a job and — like a growing number of unemployed college grads — he moved back home. However, unlike many parents in this situation, his father and I politely informed him that he could live at home rent-free for six months before we’d start requesting that he pay for his space in the house.
I mentioned our decision to a colleague, whose response was, “You’re joking, right?” The idea that we’d expect our recent college grad to pony up rent struck her as unsupportive, especially since we could easily make do without a check on the first of every month. But we weren’t joking. We had always been open with my stepson that while we were happy to help, we expected him to become a financially independent adult.
Many Americans with Gen Y children are providing support to them, but few seem to be having candid conversations about their financial decisions. According to a recent survey by the Pew Research Center, 24% of adults ages 18 to 34 have moved back in with their folks for economic reasons — in many cases as a result of the weak job market and the burden of student loan debt.
Talking about money with recent college grads can be difficult, especially when they are back in their old bedroom and it feels like nothing’s changed. Whether or not you charge rent is a personal decision, but it’s important to have a conversation about the terms of your kid’s return to the nest. You need to do this as much for yourself as for your child because prolonged support or underestimated costs may impact your retirement savings, cause financial hardship or bring up conflicting emotions about your relationship with your child. Here are three tips for talking to your adult child about moving back home:
Be clear about what’s involved. It’s easy to underestimate how adding someone to your household can impact your budget. Consider increased utilities, groceries, cell phone and other technology bills, gas or car payments, clothes, entertainment and those looming student loan payments. If taking on any of these additional expenses will cause financial hardship or derail your ability to save for retirement, be honest and make sure your child understands why you are — or will be — asking him to chip in. If you can afford to have him back home but want to instill a sense of responsibility, let him know that this is one of your goals as a parent.
Agree on what is included — and what’s not. Define how much you can afford or are willing to provide. Is your kid going to pay for rent, utilities or groceries? If so, what amount and when? If housing is free, do you expect him to cover gas, movie tickets and other discretionary expenses? What about mowing the lawn, doing his laundry or making his own dinner? Will you expect him to go on job interviews or work at a part-time job while seeking full-time employment? Try to be as specific as possible to take the guesswork out of the equation, and to have a conversation to go back to if your child gets off track.
Have a timeline and set boundaries. Talk about your child’s goals, plans and expected timeline for finding a job or saving money. Let your child know how long you can or will provide support. Determine when and how you’ll revisit the situation in the event that he hasn’t reached his goals within a certain timeline. Being as honest and unambiguous as possible can clear the air about what you want and need, so that you can maintain a good relationship and continue to meet your own financial goals for the future.
So what about my stepson? Lo and behold, he found a job within two months, packed his bags and moved to Kansas City. Would he have been as motivated if he’d known he could stay rent-free indefinitely? We’ll never know.
De Baca is vice president of wealth strategies at Ameriprise Financial.