A lot of adult children are finding it difficult to make it on their own. A recent Thrivent study found that 41% of parents have an adult child currently living with them. According to its Boomerang Kids study, the top reasons why adult children moved back with their parents are the increasing cost of housing, needing additional financial support following graduation from high school or college, and a job loss.
There’s no judgment here. In my mid-20s, I moved back with my parents for six months as I recovered from some financial mistakes. Still, the Thrivent study pointed to some ways parents could better prepare their children to live on their own. Among parents who have an adult child living with them, the study found that:
75% aren’t discussing money management;
80% aren’t setting financial expectations;
92% haven’t set a timeline for their adult child to move out.
The study also indicated that some parents with adult children living with them may be helping their children to the detriment of their own finances.
For example, the survey found that 51% of parents have compromised on saving for their own goals, such as retirement and health care, to help their children financially. Some 23% of parents said that having an adult child living with them has hindered their ability to pay off debt.
Setting expectations
The study pointed to communication as an important key to making things run smoothly when an adult child moves back home.
What’s interesting is that adult children generally seem to have higher expectations for themselves than their parents have for them. For example:
68% of adult children who have moved in with their parents expect to help pay for groceries, whereas just 52% of parents have this expectation
50% of adult children expect to pay rent, whereas just 32% of parents have this expectation
45% of adult children expect to help pay for internet/cable, whereas just 19% of parents have this expectation
43% of adult children expect to help pay for utilities, whereas just 31% of parents have this expectation
The Thrivent study points to four areas where parents could do a better job of helping their adult children become financially independent:
Work with them on their personal budget;
Determine their household contribution — how much will they pay in rent or contribute to household expenses?;
Don’t let them neglect their own retirement savings;
Help them set goals, whether for a job search or a target move-out date.
The study did not address student-loan debt specifically, but it’s a likely cause of young adults struggling financially. To go upstream on this issue, if you have younger children, early in their high school career, talk with them about the cost of college.
Tell them how much you are prepared to help. Show them the cost difference for an in-state vs. out-of-state and a public vs. private school. Create a first-year-after-college budget, using average first-year salary information for the field they’re interested in and then mapping out their likely monthly costs. Show them the impact of a student loan. All of that should help them make a sound, realistic decision about where to go to school, hopefully motivating them to build a plan for graduating debt-free.
What are your thoughts on all of this? Has one of your adult children moved back with you for a time? If so, what sort of arrangement did you establish?
