By John Ingrisano
Director, Family Finance Conference Center
It’s grown from a trend to a movement to a downright lifestyle: Thanks to a lousy economy and zero-opportunity job market, 85% of this year’s college grads are moving back home with Mom and Dad (TIME News Feed). But wait, there’s more: A recent Pew Research Center study shows that 40 percent of 18 to 29 year olds are either jobless or out of the workforce altogether. It’s a tough time for the younger generation.
The result can be an emotional challenge when junior moves back into the basement; it can also be a financial strain for everyone.
A few tips to help both generations survive and maybe even thrive:
- Lay down rules … and put them in writing. These should include everything from use of shared resources (“Who ate the last piece of pizza in the frig?”) to house guests (“Mom, meet Cindy. She’ll be staying for a few weeks.”) to pets (“Monster’s not like other Pit Bulls; he’ll get along just fine with your Fluffy.”) to the use of tobacco, alcohol and drugs (“Hon, what’s that smell?”). Need help setting up the rules? Consider a pre-move-in contract.
- Decide who pays for what? Yes, you want to help your children, but if your son or daughter gets a job, consider asking for rent. Decide such things as who fills up the gas tank on the car, as well as who drives the vehicle.
- Decide how much you should/can help with debt. Between college loans and possible credit card bills, your boomerang child may return home with some major financial liabilities … and no money to pay them. Yes, you may want to help. At the same time, be careful not to jeopardize your own financial security. It is not uncommon for parents to tap into their retirement nest eggs to help. Only do so if it will not undermine your own plans. Seriously. If you are in your 50s, you may have ten to 20 years to retirement. That gives you very little time to recover if you begin siphoning off assets. (Also, if you are not yet 59 ½, you could pay tax penalties if you take qualified money.) Your children, on the other hand, may have 40 to 50 years before retirement. That gives them decades to crash and burn and still recover financially. So, do not automatically pick up your child’s bills when they come in. Maybe free room and board is not just all you can afford, but more than enough.
- Have a move-out date. This gives everyone something to look forward to. It also provides an incentive to help motivate your child to be aggressive in his or her job search. You can always revise the date as needed. However, setting one initially helps define an eventual exit strategy.
These are tough times for American families. If your child need to return to the nest, make sure everyone understands the pros and cons of the deal and is willing to work together. Good luck. – JRI
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The Family Finances Conference Center tailors programs to the unique and individual needs of client organizations and their members and employees, based on the principles of the book and workbook set, The Back to Basics Book of Money! A Couple’s Guide to Financial Peace.
209 Church Street
Algoma, WI 54201
John Ingrisano is a business journalist, public speaker, author of The Back to Basics Book of Money! A Couple’s Guide to Financial Peace, and director of the Family Finances Conference Center. He can be contacted at (920) 559-3722.