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Preparing for the Return of a Boomerang Kid

Is your recent college graduate or adult child moving back in with you? It's far from an uncommon scenario these days. According to a recent Pew Research Center study, 3 in 10 young adults between the ages of 25 and 34 have lived with their parents in recent years.

Known as the "boomerang generation," young adults today are apt to move out of the family home for a period of time before returning to live with their parents. Grown children may need or want to move back in with mom and dad for any number of reasons, including poor job prospects or the desire to pay down debt.

Keeping your financial life on track with a full house
Before you welcome a child back under your roof, it's important to make a plan to manage the transition. Use the tips below to help keep peace in your household and ensure that both you and your child stay on course to meet your financial goals.

  • Be realistic. It's natural to want to support your child as he or she searches for employment or saves money. But don't exceed your financial limits. Your child should understand that it's important for you to meet your own retirement and debt repayment goals and obligations.
  • Map out a financial plan for your child. Work with your child to set a budget and savings goal. Discuss the amount of financial help you're able to provide and decide if your child will stay on your health insurance plan (most plans cover kids up to age 26).
  • Set a target move-out date. If you don't set a limit, your child may stay at home longer than expected or delay working toward future plans. If he or she needs to start paying off debt or is hoping to save money for a down payment on a house or condo, have a realistic discussion about how long it will take.
  • Reassess the plan as necessary. Once you've made a financial plan and set a move-out date, ensure that your child is making progress toward those goals. Talk regularly about obstacles he or she has encountered and how you may be able to help with the job search. If your child hasn't been able to find a job, you may need to update the plan to reflect a more realistic time frame.
  • Decide if your child will pay rent. Some parents charge grown children rent to offset the costs of having another person under their roof. If you don't need the rent money, you might consider letting your child save that amount to use when he or she moves out. Exchanging household chores for room and board is another option.
  • Consider whether you'll help pay off your child's debt. If you decide to assist your child in paying off education loans or credit card bills, be sure to create a contract that outlines what you expect in return.

Making the best of a not-so-ideal situation
Dealing with a full house can be tricky, especially if you've lived in an empty nest for a while. But setting clear ground rules and financial expectations will help ensure a smoother transition when a child returns home—and help him or her regain financial independence more quickly.

2012 Commonwealth Financial Network