In or Out of the Nest? Helping Adult Children
Almost a third of young adults ages 18 to 34 were living with their parents in 2014, up from one out of five in 1960. And for the first time on record, dating back to 1880, the percentage living with a parent was higher than the percentage living with a romantic partner. This may have shifted slightly over the last two years, as the economy has improved, but it’s not only the economy that keeps young people in the nest. College attendance and the average marriage age have increased.1
Having your adult child live with you during or after college, while looking for work, or when beginning a new job may be a natural stage in your family’s life. But continued long-term support — in or outside of the family home — can slow a young person’s progress toward accepting adult financial responsibilities and could make it more difficult for you to pursue your own financial goals.
Here are some considerations if you’re in a similar situation.
Cut the strings gradually. If your working son or daughter is living with you, consider charging a low level of rent and/or a small portion of other household expenses. On the other hand, if the young person is paying off student debt or saving for a specific goal, such as a security deposit on an apartment or a down payment on a house or car, you might pay all expenses for a period of time.
Require some cost sharing. A young working adult who is on your mobile phone plan or covered by your medical insurance should pay an appropriate share of the monthly phone charges and out-of-pocket medical expenses.
Examine the situation. If your adult child has money problems, consider whether the situation is an unexpected short-term crisis or a chronic issue. What kind of sacrifices is he or she making to improve the situation? What steps could help avoid a future crisis?
Establish whether monetary help is a gift or a loan. Making it a loan could help your child develop financial responsibility. If it’s a loan, set a realistic repayment schedule.
Consider other ways to help. Do you have an extra car for transportation to a job? Can you provide child care for grandchildren? Do you have contacts who might help your son or daughter find a job? Are there outside agencies that could help?
Children are precious, and it’s natural to want to help them in every way you can. However, both you and your adult children may be on more stable financial ground if you encourage them to stand on their own.