With a slowly growing economy and a still sluggish job market, there has been a continued increase in children moving back home after having lived independently on their own. These so called “boomerang kids” are popping up more frequently and when this situation is managed improperly, it can cause serious tension in a family.
However, many parents are viewing this “boomerang” as an opportunity. It can allow youth to begin saving money for the future, continue a job search or to get out of debt, but only when expectations are clear and roles are known.
Patrick Egan, chief retirement spokesperson for Thrivent Financial for Lutherans says, “This is not necessarily the troubling scenario it was once thought to be and this can actually be a very productive time for both children and parents if it’s handled well. When children move back home a closer bond can form between young adults and their parents, and this can lead to the young adults receiving financial, practical and emotional support from their parents.”
In May, sociologists Karen L. Fingerman and Frank F. Furstenburg reported that “in 1988 less than half of parents gave advice to a grown child in the past month, and fewer than one in three had provided any hands-on help. Recent data show that nearly 90 percent of parents give advice and 70 percent provide some type of practical assistance every month.”
This type of increased financial co-dependence between parent and child can lead to strain when living together again after a separation. If you are a parent with a young adult at home, it is important to communicate about expectations and responsibilities and to help your child build a solid financial foundation for their future.
Egan says reviewing these tips can smooth the transition and can guide both the child and parent through a tough time:
1. Set expectations
Discuss with your child how much he/she should contribute to household expenses and tasks. A key to making the transition easy on everyone is having clear expectations for everyone involved both financially and otherwise.
2. Review your insurance and taxes (and theirs)
Save time and money by seeing if your boomerang child is covered by your health and/or car insurance. Also see if you are able to claim your child as a dependent.
3. Consider having them “pay rent”
Consider having your child pay rent or at least a token amount for living expenses. This gets the child into the habit of paying a monthly amount. Or have a set amount of money go into a saving account monthly that the child could later use for a down payment on a house or car.
4. Help them keep busy
While waiting to get hired, your child could continue to expand their resume. For example, remind them to consider volunteering, joining a professional organization, connecting with a networking group or participating in an internship, even if it’s unpaid.
5. Focus on your own finances first
You may be tempted to use retirement dollars toward financial assistance for your child, but don’t derail your own financial plans. Make sure your savings and retirement plans remain intact. Not sacrificing your own livelihood and continuing to invest in important options like life insurance, disability income insurance and long-term care insurance is critical to maintaining your overall financial health.
Though you may not have planned on it, helping support your child after they’ve left home can be a springboard toward a healthy financial future for them. Following these tips can help ensure that the boomerang experience remains positive and the relationship remains strong.