Remember the comedy film, "Failure to Launch," where Matthew McConaughey played Tripp, a 35-year-old slacker living at home? That was back in 2006, when unemployment was below five percent, the real estate bubble was still inflating and the term "boomerang generation" had yet to become a household word.
Today, due to one of the weakest economies in a generation coupled with burgeoning student debt, many young (and not so young) adults have been forced to seek the refuge of their parents' home. According to recent surveys, almost a third of adults age 34 and under are living with their parents. What the surveys don't show is the toll it can take on familial relationships and finances.
If you have an adult child returning to the nest, here are four steps you can take to preserve both your sanity and your solvency:
Have A Plan And A Deadline
It's important to establish from the outset that everyone is on the same page. Sit down with your child to define why he or she will be living at home (to launch a career or business, obtain a degree, take an unpaid internship or save money for their own place) and set a time limit for how long they can stay. The deadline can be adjusted later, but it's important to have an established end date to avoid resentment and misunderstanding. If appropriate, have your child put in writing -- as a business plan, not as a legal contract -- specific steps he or she plans to take to achieve this goal by the agreed upon deadline.
Offer Help, Not Handouts
Few parents can resist giving a child with money problems a little cash with no strings attached, but be careful not to put your own financial future in jeopardy. For the best of reasons, parents often forget that the bad economy affects them financially, as well. If they're close to retirement, they may not have much time to rebuild their savings. Remember that your children have decades to build their financial security, and they shouldn't be deprived of the satisfaction and confidence that comes from doing so.
Be warned: Making things too easy for them can backfire. Adult children who get bailed out too many times may wind up feeling badly about themselves and end up resenting their parents for it. If you do plan to give money, consider making it a loan. Have a promissory note prepared and have your child sign it. Be aware that the IRS will not allow you to make interest-free loans, so you must fix a reasonable interest rate, otherwise the IRS will "impute" interest income to you and require you to pay taxes on the imputed income.
Be A Life Raft, Not A Cruise Ship
Make it clear that your role is to help your adult children become financially independent, not provide a lifestyle. Be generous with love and encouragement, but don't overdo it on the money and material goods. Providing food, shelter and help with tuition is appropriate and supportive in developing their independence. Fueling their lifestyle with extravagances, such as paying for vacations, is another story.
Foster Strong Financial Habits
Ask your son or daughter to contribute in non-monetary ways, such as doing household chores, to carry their own weight. Letting them live rent-free and lounge around the house or play on the computer all day won't help them prepare to leave the nest. Helping them budget and restructure their loans will set them on the path to gaining lifelong financial discipline. Paying off all their debt for them does little to teach them personal responsibility. Your goal should be to help foster strong financial habits that will help to re-launch them back into the world as responsible, self-supporting adults.
This information in this article is general in nature and may not apply to your own financial situation. Please consult your own professional tax advisor regarding this information and your own personal tax needs. For a complete disclosure statement, please see my biography.
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Colin Barnicle: The Budget Cut and the "Boomerang Kids"
Boomerang Generation - Wikipedia, the free encyclopedia
'Boomerang' children:When the nestisn't empty anymore - The New ...
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Auldphart
The majority of Americans wouldn't live with their parents unless they didn't earn enough to pay rent.
DUH.
If wages are low and the rent is high you are gonna have to either move-in with family or somebody else. And you're gonna trust family over some stranger. Yet if you had enough money to pay the rent on your own then that wouldn't be an issue.
Hence once again it's all about the : $$$$$$$$$$$$$$$$$
My grandmother used to live with us because she can't take care of herself anymore. It was my parents duty to help out their parents when needed. My younger sister moved back home because now our parents need some help. I live too far from my parents so I can't offer the same help. But I do try to contact my family everyday, that is what facebook is for.
A lot of the tips mentioned are values that should have passed on at childhood. Chores and financial responsibility - seriously? Do many parents wait until adulthood to talk to their kids?
I had chores when I was in grade school and had a bank account when I was old enough to work.
My wife was a high school teacher in a school with a sizeable Asian population and frequently saw kids who were near the point of breakdown due to their parents' unbending and unending demands. It wasn't all of them, certainly, but it happened often enough to be more than an occasional occurrence.
Auldphart
First you kick them out, THEN you change the locks. If you change the locks first, they may find a key and have it duplicated.
There is a more effective alternative, however. Kick them out, change the locks, sell the house and move without leaving a forwarding address.
We solved the problem a different way. We sold the house to one of the kids and then moved. He changed the locks.
Auldphart
In reality though, this system of belief leads to shattered families; kids come home for holidays (if at all), grandparents have little relationship to grandchildren, and old folks die alone in nursing homes. How can this be in anyone's best interest?
I now live in Europe. There is more social cohesion here; if mothers work, grandmothers care for the young. Preschool is a place for learning, not for kid-parking. Adults live at home until they marry, and often times, the parents buy the first home for the newly weds. Nursing homes are nearly non-existent - no one would EVER want to put their parent there if they could help it.
Its not necessarily utopia, but the "generation gap" doesn't really exist here, teen pregnancy is rare, and families really do help each other because its what families do.
I really think that Americans might want to rethink their beliefs about family.
That's a pretty sweeping statement. You make it sound as if we cut most ties once kids are out of the house.
You're trying to compare a continent with 45 separate countries to a single nation. To say Europe doesn't tell me anything. Where in Europe? I have a German sister-in-law. From what she's said, it's not all peaches and cream there and there are 44 other countries to be accounted for.
Paris, France, is 642 miles from Vienna, Austria. To get from Paris to Vienna, you need to cross two national borders and will have been in 3 separate countries speaking 2 different languages. The distance between San Diego, California, and Redding, California is only 23 miles greater than the distance between Paris and Vienna and you're still in the same state. Just to get to the Oregon border, you have to drive another 120 miles. Drive 120 miles beyond Vienna and you're in Hungary, a 4th country with a different language. The distance between San Diego, California and Medford, Oregon, is almost 40 miles greater than the distance between Paris and Budapest.
I have to wonder just how prevalent it is for parents to buy the first home for newlyweds anywhere in Europe. While are reasonable by US standards, there are quite a few that are exorbitantly high.
BTW, we help each other, too. We just don't live together.
Auldphart
And no, it is not all peaches and cream in Europe - however, social and family cohesion make for a far happier and healthier society - and I still think Americans need to rethink their core beliefs about family and the entire radical independence notion that we so strongly cling too.
Once upon a time in America, the notion of personal responsibility meant responsibility for self, family, community and country. That notion has been eroded to mean "I got mine, screw you buddy" - and its not been good for our country.
How you treat them, is going to affect the way they treat you in your dotage.
And this doesn't even take into account that 3 of the additional adults would have roundtrip commutes of 240 miles while the other 3 would have commutes of around 150 miles.
Even my parents' parents didn't live in one of those mythical multi-generational paradises as either adults or children.
Auldphart
The difficulty lies in trying to recreate a family culture that enables shared commitment and sacrifice but still respects each individual.
We could learn a lot from our great grandparent's generation where joint family ventures and cohousing were the norm.
Yearning for a mythical Golden Age won't recreate it. The conditions that would support it have long since vanished.
Auldphart
It makes us eighties kids resentful that we are called lazy and spoiled when it's generally not the case.
Plus, this is not a good time to be a recent college graduate.
My son is about your age and he stays home with us during summers between school years.
He helps out in many ways including financially at times.
We enjoy his companionship and feel no need to 'push' him out of the nest.
If everyone living under a roof pulls their weight and earns their keep, it's all good!