One of the growing trends in the U.S. is that of “boomerang kids – twenty-somethings that move back with their parents, usually after graduating college. With a tough job market, it can be hard for the newly-degreed to find work. Many are coming home to live with mom and dad in order to get their feet back on the ground, and maybe get a head start in life. While it is natural to want to help your children succeed (no matter their ages), it is important that you not enable them to adopt poor habits that can hinder the ability to develop financial independence.
You walk a fine line between help and enabling in some cases. You will need to take a hard look at your options, and what you are doing with your money before you decide what to do, and make sure that your child is willing to do what it takes to get back on his or her feet. Here are some ideas that can you can consider as you encourage your boomerang kids to help themselves:
Set Clear Expectations
This is probably the most important part of helping anyone with finances. Set clear expectations for your children. You will need to decide what is best for you and your family, as well as what you think will be of most benefit to your children. Some feel like setting a time limit, such as a year or two years, is helpful. Others believe that their kids should be making progress in some way while living at home, and set conditions.
However you decide to do it, make sure that expectations are clear at the outset. If your expect your grown child to be out within one year, pay a modest rent and cook dinner once a week for the family, make sure you discuss it ahead of time, and that your child agrees to the conditions. Work out what you think is reasonable, and then stick to it. If your child knows that you will hold them to the expectations, they will be more likely to succeed.
Encourage Your Child to Make Financial Progress
No matter how old your boomerang kids happen to be, you should encourage them to make financial progress while they are living at home. Make it clear that they are not living with you so that they can have more money for video games and entertainment. Instead, encourage them to pay down debt, or save up for a down payment on a home. If your child is earning income, you can take a portion of that as “rent and put it in a high yield savings account, meant to help your child pay a security deposit on his or her own place, or to be able to buy a home. If your child doesn’t have an income, it might help if you require that he or she spend a certain amount of time each day do job-search related activities.
In some cases, you might encourage your child to finish school. Not all boomerang kids have four-year degrees. Some of them are coming home after being laid off, or if some other project did not turn out as expected. It might beneficial if you made going to school a condition for staying with you, if your child doesn’t have a job.
Encouraging your child to use this time back with mom and dad as a way to get on top of things can be a great way to help with a head start, and encourage financial independence. Some day, you will be gone, and your children need solid financial lessons that they can follow as they improve their finances.
Help Around the House
With your boomerang child back in the house, it’s a good idea to remind him or her that there are things that families do when they are living as a unit. Don’t just let your child enjoy a free ride. Assign him or her chores to do. Whether it’s weeding the garden, taking out the trash, or sharing some of the cooking responsibilities, it’s a good idea to have him or her help out around the house. Not only can this be a way for your child to show gratitude for your help, but it will also provide practice for when the child is in his or her own place, and reinforce lessons related to responsibility and accountability.
Don’t Jeopardize Your Retirement
Another thing you need to do is make sure that you aren’t jeopardizing your retirement in order to support your boomerang kids. Check your finances carefully, and make sure that you are in good enough shape to support your child. As a general rule, it’s a bad idea to tap your retirement accounts for these matters. You might have to pay severe penalties, and the opportunity cost while the money is no longer in the account working for you, is also higher.
While it would be nice to think that your childe would return the favor and support you retirement, this isn’t a given. Relying too much on any one outcome could come back to haunt you. Make sure that you can handle the expenses that come with having your child living back home with you. This is especially true if your boomerang kid is bringing a life partner and kids to live with you as well. The more people you have to support, the more you will need to make sure that you are prepared to shoulder the cost.
You aren’t doing your child any favors when you enable poor financial habits. Letting your child sit around all day playing video games without a job (or an inadequate part-time job) won’t help anyone in the long run. Providing everything for your child can also be detrimental. Parents should attempt to reach solid financial skills, and encourage children to put these in action. Have clear expectations so that your child knows what’s coming, and prepare for it better. You can help your child more in the long run by truly helping, and encouraging complete financial autonomy.