The most important budgeting steps when adult kids move home

I’m often asked what’s the #1 most important thing parents need to do when figuring out and planning how to deal with the financial costs of adult children living at home. Here’s my answer:

The most important thing parents can do when planning for adult children to move home is sit down and work out a family budget that documents their living expenses. Then, make a best-guess estimate about how those expenses will be impacted by the adult child’s move back home. Expenses like food, electricity, gas, and insurance will likely all increase. Share this information with the adult child so that they understand their financial impact on the household — many adult children are under the mistaken impression that their stay at home is “free” for everyone. Talk about how the adult child can contribute to the additional expenses.

I recommend all adult children living at home pay some rent, partly to offset the
additional expenses, but also to maintain the routine of having a monthly financial responsibility and  to help maintain their self-esteem as a contributing member of the household. If they have no income at all, they can earn their rent by contributing manual labor around the house, especially to tasks the parents would otherwise have paid for, like washing the car, painting the garage, and so on.

And one key thing: Parents should never put their own financial well-being in jeopardy to support an adult child. Adult children have many more earning years ahead of them than their parents, who may be struggling to save for retirement.

The Nest that Doesn't Empty: Article in the Deseret News

“People make a lot of assumptions about how it’s going to work, and expectations can lead to a lot of challenges, especially if the children have a different perception of what staying at home is going to be like,” said Christina Newberry, Vancouver, Canada, author of “The Hands-On Guide to Surviving Adult Children Living at Home.”

“Parents may be focused on trying to get the children out of the house and the children may not be aware of that. Once you’re an adult, the goal is to get out of your parents’ home. So the conversation is why you’re at home and the steps needed to achieve independence. You should also discuss expectations in terms of how to behave when at home.”

Read the rest in the Deseret News.

Canadian poll shows baby boomers are struggling to financially support adult kids

New research from Canadian bank TD Canada Trust shows the majority of baby boomer parents have financially supported their adult children in some capacity:

  • They have let them live at home rent free (43%) [yikes – I suggest all adult children living at home should pay at least some rent].
  • They have subsidized big purchases like a new car or computer (29%).
  • They have contributed to monthly bills like groceries and rent (23%).
  • They have helped pay off credit card or other debt (20%) [here’s why that’s a bad idea…].

 

But the scariest statistic is that one-in-five baby boomers (19%) admit they would consider putting their own security and financial future at risk to help support their adult children. Watch out, or you may find yourself filing for bankruptcy instead of retiring.

About the survey: TD Bank Group commissioned Environics Research Group to conduct an online custom survey of 2,155 Canadian parents who have adult children not attending school. Responses were collected between January 10 and 25, 2013.

Infographic: Percentage of adult children living at home, 1983–2011

Here’s an interesting infographic from the U.S. Census Bureau showing how the trend of adult children living at home changed from 1983 to 2011. Note that in plain language, “adults 25-34 who are the child of the householder” means “adult children aged 25-34 who live at home.”

Number of adult children living at homeNote one thing from the small print: “Unmarried college students living in dormitories are counted as living in their parent(s) home.” That’s interesting, because these children are clearly not living at home — though they likely are still being financially supported by their parents.

In any case, look at the difference between adult sons and daughters!  In 2011, 59 percent of men aged 18 to 24 lived at home, and 50 percent of women. These number are up from 53 percent and 46 percent, respectively, in 2005.

And note that the trend of adult kids moving home is not strictly tied to the economic downturn. Rose Kreider, a family demographer with the Fertility and Family Statistics Branch and author of the report this figure comes from, said, “The increase in 25 to 34 year olds living in their parents’ home began before the recent recession, and has continued beyond it.”

Almost three million adult children living at home in the UK

New research from Saga Home Insurance provides some interesting statistics about the number of adult children living at home in the UK. The key finding is that around 3 million parents over 50 have adult children living at home.

But broken down by age, the stats get much scarier:

  • The average age of adult children living at home is 27
  • About 14% of the adult children living at home are between 31 and 40
  • 32% of parents aged 50–54 have adult children living at home
  • 16% of parents aged 60–64 still have adult kids at home!

More than a quarter of middle-aged adults are the PRIMARY source of income for their adult children

Pew Research is always an interesting source of statistics on just about everything in American life. Today I saw a statistic from their report on the sandwich generation that just about knocked me over. I’ve reported time and time again on statistics that show that large numbers of adults are providing financial support to their adult children. But I’d never before seen a stat capturing how many of those parents are providing the primary support for their adult kids. That means these parents aren’t just topping up an adult child’s measly earnings at an entry-level job, or providing occasional assistance when things get tough. Primary support means that these parents are still the biggest source of income in their adult children’s lives — maybe even the only source. Here’s the statistic exactly as it appears in the Pew report — and note that they define an adult child as a child aged 18+:

Roughly half (48%) of adults ages 40 to 59 have provided some financial support to at least one grown child in the past year, with 27% providing the primary support.

Parents providing support to adult children

I have to say, even after all the work I’ve done on this subject, that shocks me. Primary support is not just a few dollars here and there — it’s a massive financial commitment for parents who are in the age range that they need to be thinking about saving for their own retirement.

Reporter looking for familiy that's used a contract with adult kids

As you know, I highly recommend putting together a contract with your adult kids who are moving home. I think this is so important that I provide a contract template in the toolkit available with my book.

A reporter from a major newspaper is writing a story on this topic and is hoping to speak with a parent who’s used a contract with their adult kids. If you’ve done so, and you’re interested in being interviewed for a story, send me an e-mail and I’ll connect you with the reporter.

Adult kids reaping the digital benefits of living at home — even after they leave

Here’s an interesting new stat for you: More than 40% of parents pay the cell phone bills for their adult kids aged 18 to 35. Twenty-nine percent of them do so even after the adult child has moved away from from home.

I have to say, this one really shocked me. I just find it hard to understand this one — and I can only imagine what my parents’ faces would have looked like if I had ever asked them to pay for my cell phone. I can tell you this — they would have said no. And I really think  they would have been right to do so. It’s one thing for an adult child to benefit from the family landline while living at home (I certainly did this). It’s entirely different for a parent to pay a bill that is clearly not a household expense. Even if the adult child’s phone is part of a family plan, they should still be responsible for their portion of the bill.

And how about this? It doesn’t end at the cell phone bill. Some parents are paying for all the digital goodies that keep their adult children entertained:

  • 17% pay for mobile wifi access
  • 12% pay for streaming video accounts like Hulu and Netflix
  • 10% pay for music services like iTunes and Spotify

All of this (including the cell phone) adds up to about $108 every month, or almost $1,300 per year. That may not sound like a huge amount of money, but it’s certainly not insignificant.

I have to say, none of these services are necessities of life. If a 30-year-old can’t afford these services, maybe he or she should learn to live without them for a few years. When I was in my early twenties, some of these services didn’t exist. But I did pay for my own cell phone — and I had my own account at the video rental place (remember those?), even when I was living at home.

All the stats in this article come from a poll by Harris Interactive as reported by the Wall Street Journal.

Canadian contest offers a prize package to get kids out of the nest

adult children living at home contestWell, here’s something interesting.

I should start by saying that AdultChildrenLivingatHome.com has no affiliation with this contest whatsoever — I just thought it was something you all would want to hear about. In fact, I’m definitely interested in knowing what you think.

Here’s the scoop. The Canadian rate-finder website RateSupermarket.ca is having a contest for the “Ultimate Mother’s Day Gift.” What’s the prize? A prize package worth about $5,400 designed to help get your adult kid out of your house. They don’t specify what the prize package includes, other than to say it’s “full of grown up goodies” and that it’s designed to “get yourself or your grown child out of the house.”

So, what do you think? Is this really the ultimate Mother’s Day gift? Is $5,400 really enough to get an adult kid out of the house? Will you be entering?

You can find the contest details (and enter, of you’re a Canadian resident and you’re so inclined) here.

A chat with Claudia Lonow, creator of "How to Live With Your Parents (For the Rest of Your Life)"

Yesterday, I got to chat with Claufia Lonow, creator of “How to Live With Your Parents (For the Rest of Your Life),” a new ABC series starring Sarah Chalke, Elizabeth Perkins, and Brad Garrett. We were on HuffPost Live together, and it was great to have a chance to hear about her really positive experience living with her parents. (The short version: She has lived with them for about 18 years and has no plans to move out — but several years ago they all bought a house together, so she’s certainly paying her own way.)

Here are a couple of shots from the show.

HuffPo2-1

HuffP02-2(with Claudia and host Nancy Redd)

If you missed the segment, you can watch it anytime here.