If you are the parent of an 18 to 34 year old, I wouldn’t be surprised if he’s napping on the couch behind you as you read this. And I’m not knocking your parenting—or your kid. He isn’t the only one. More young people than ever are boarding with mom and dad to save money. While your instinct may be to pitch his smelly Fjallraven backpack on the curb and tell him to shave off his goofy millennial beard, don’t do it. Believe it or not, Boomerang Boy could actually be practicing smart personal finance.
Let’s begin, as I like to do, with some eye-opening stats. According to May 2016 Pew survey, a record 32 percent of young adults live with their parents. For the first time in more than 75 years, living in Motel Mom is the most common kind of living arrangement. Surprising? Not especially. The last time this happened was in 1940—a decade after another kinda major market implosion. As median wages fell for young men in the years following 2008, the share living with parents soared. (Why am I ragging on the guys? While they’re more likely to live with their parents than with a spouse or partner, the study shows that women aren’t.)
Now that your children are moving back in droves, don’t send them packing. Instead, help them make the most out of the financial breathing room you’re providing. A few years (okay, maybe months) living rent-free may be just what they need to save money in a challenging housing market, or find a good job at a time when that can be an uphill climb. That doesn’t mean giving them a free ride—or you may end up like a good friend of mine from growing up back in Queens. Ever since her divorce 13 years ago, Anne-Marie has provided a home for her four adult children—two boys and two girls. Now ranging from 19 to 22, they’re bunking in the basement while they launch careers and attend college. But it wasn’t like she had some sort of master plan.
“It was simply a continuation of life as we knew it,” she told me. “I sold my house three years ago, when three of my four kids were in college. They were all going to school locally, so I planned to rent an apartment big enough for all five of us.” Fortunately, she scored a rent-controlled duplex in Brooklyn, roomy enough that everyone has a place to SnapChat in peace and conveniently located for breezy commutes. And with college room and board costing north of 10 grand a year (In New York City you can nearly double that), she’s saving a bundle.
But there’s one problem. “Since our move to Brooklyn was an extension of the life we’ve been living for the past 13 years, I never had a sit-down with them to review our arrangement. That’s been a bit troublesome recently because I’m still running the household and maintaining things and my kids have morphed into fun but kind of irritating roommates.”
Because her kids didn’t actually move back home, she never had the Big Talk (my roof, my rules, hands off my Almond Butter Chocolate Chunk Gelato, etc.) And trust me, her kids are anything but mooches—it’s just that no one thought to make some ground rules. So I set about coming up with a boilerplate for parents like Anne-Marie who need to have the big talk, but don’t know where to begin.
Draw up a contract
Yes, I mean in writing. With little lines at the bottom for their signatures. Here you’ll agree to how much, if anything, will be charged in rent. You’ll also settle on a sum that your kids will kick in for necessities such as groceries, toiletries, and office supplies. Start with a small amount. I know it’s tempting to use the added income to boost the household budget, but this is about the principle not your bottom line. Consider consequences if the contract isn’t honored. No, you don’t have to disown them, but maybe you can withhold car privileges or access to the garage for band practice. Or threaten to Facebook those supercute bathtub pics from when they were babies! (You know you want to.)
Bring back the chore chart
“The deal in our house is that schoolwork and creative endeavors trump everything. I’ve always subscribed to that rule in hopes that my kids would be happy, productive and social,” says my friend. “They’ve definitely thrived, but lately it’s been tricky to help them shift some of their energy toward maintaining our place.” Shift! Shift! Aside from the companionship of your kids, which can be pretty sweet as we get older, you’ve just tapped into a wealth of free labor. Divvy up all the household duties—from cooking to cleaning to rubbing your weary old feet. Unlike a seven year old, a twentysomething can actually clean the gutters without crash landing on your azaleas. But again, go easy on them. They have jobs to do and independent lives to lead.
Develop a budget
A Fidelity Investments survey found that 2013 grads owed an average of $35,000. While the bulk was in student loans, credit card debt accounted for $3,000 of that scary sum. Getting it down to zero is the priority. Once the plastic is paid down, have them look into repayment plans for their student loans. If they have high-rate private student loans, encourage them to refinance. Only when debt is under control, should they start saving. Agree on a certain amount to be culled from each paycheck so they can begin saving for an apartment by a specified date. (Separately, have them stash away cash for emergencies; if not, your boomerang baby might come flying back.)
Set a goal
Okay, this may be the hardest part of all, but it’s critical if you don’t want your family slumber party to turn into a family feud. “We planned to keep on keeping on until my kids had enough money saved to move out,” says Anne-Marie, “but that hasn’t happened yet.” That’s why it’s not enough to set a financial goal for your kids: you need to agree on a deadline for that goal to be met. Because after a few years of this, you might be ready to move out.
Beth Kobliner is a personal finance commentator, journalist, and author of the New York Times best seller Get a Financial Life. Her new book for parents, Make Your Kid a Money Genius (Even If You’re Not), will be out in early 2017. She also served on President Obama’s Advisory Council on Financial Capability for Young Americans, dedicated to increasing the financial know-how of kids of all ages and economic backgrounds.