Money Smart Kids
Five Lessons From Boomerang Parents
What to expect when your adult children move back in.
By Janet Bodnar, Editor, Kiplinger's Personal Finance
August 18, 2009
I've been writing about kids and money since 1993, when my own children were 11, 9 and 5 years old. So we've grown up together through it all: allowances, bank accounts, summer jobs, college expenses, credit cards.
Now that my kids are in their twenties, I and many of my contemporaries are dealing with boomerang kids, who head back home to get their financial bearings. What I've learned from parents in the trenches is sometimes surprising.
1. More often than not, parents roll out the welcome mat for their adult children. In fact, some parents prefer that their kids come home for a year or two so they can cut expenses and sock away money to pay off student loans, pay for graduate school or buy a house.
2. Too much togetherness does get old. One of my friends took in her son for R&R when he couldn't get past a case of writer's block on a new book. But weeks stretched into months and the book languished.
Family tensions finally erupted from an unlikely source: my friend's college-age daughter, who chided her parents about being enablers for her procrastinating big brother. "Give him a deadline," she told them.
They haven't gone that far (though little sister is right). But the blowup did prompt big brother to get on task with the book and other unfinished projects.
3. The most successful arrangements have a plan, with a capital p. Before the kids come home, agree on terms and expectations, and even put them in writing.
Your "contract" should cover how long your child will stay, what the house rules will be and how much he or she will contribute, either in cash or services. So you might agree, for example, that your son can come home for six months, do the grocery shopping and other chores, and pay rent if he elects to stay after he finds a job. Once you've set up the terms, stick to them.
4. Financial issues will crop up even if your kids don't move back home. Should you buy health insurance? Pay off credit-card debt or student loans? Co-sign a car loan or lend them money for the purchase? Here's what I recommend:
Buy the health insurance. Most young people in good health can get it for $100 a month or less, a cheap price for peace of mind. See Kids, College and Insurance to learn more.
Help them work out the best deal they can on student loans, but don't pay the bills. The same goes for credit-card balances. Young adults need skin in the game, and making on-time payments is the best way to build a good credit rating.
You might lend them the money to pay off credit cards or buy a car and have them pay you back at a reduced rate of interest. For a fee, www.virginmoney.com will draw up documents to make the loan official, arrange cash transfers and report payments to the credit bureaus.
I'd be leery of co-signing a loan for a car or anything else unless you have faith (and evidence based on experience) that your child won't turn out to be a deadbeat and put you on the hook.
5. Many parents harbor a desire to give their kids money eventually to, say, pay off loans or buy a house. But don't do anything that will jeopardize your own finances. If you can afford to give money away, make your gifts infrequent and spontaneous. Your kids will appreciate your generosity instead of taking it for granted.
Earlier this year my grad-student son had a once-in-lifetime opportunity -- but not the money -- to go to England to watch the high school team he had taught to row compete in the Henley rowing regatta. He priced out a good deal on the trip, and we offered to pay as a reward for his dozen years of hard labor as an oarsman and coach.
And my husband, ever fair, surprised our other two children by giving them an equal amount.
- Comments
- RSS
Permission to post your comment is assumed when you submit it. The name you provide will be used to identify your post, and NOT your e-mail address. We reserve the right to excerpt or edit any posted comments for clarity, appropriateness, civility, and relevance to the topic.
View our full privacy policy
Reader Comments (4)
Posted by: Bob at 08/19/2009 01:39:29 PM
I have also watched many of my friends whose children have come home. This situation appears much more difficult than raising them in the first place... Definitely lay down the law from the beginning and be very tight about handing out money or gifts. They will quickly be viewed as entitlements. Even if you raise your children with good money sense there is a good possibility that they will marry someone who is exactly the opposite. The only general advice I can think of is to limit your help as much as possible. Let them know that they are grownups who should be able to stand on their own two feet and any assistance will only be for unforeseen emergencies and temporary. Enabling bad habits is the easier route but always the wrong thing to do.
Posted by: AMenCPA at 08/19/2009 01:43:46 PM
People just need to stop babying their kids. The day my daughter moved out to head to her life after high school, I sold her bedroom set, made the room and office and when she comes home from college to "visit" she stays in the guest room. Gave her all of the advice I could as she was growing up and she got to make her choices and must live with them. I may help if she really needs it, but I will not just give her anything and she must ask me for the help and prove she really does need it. I agree there should be rules in writing beforehand if moving back but I doubt my daughter will do that with me. She may with her father who does tend to baby her. But she knows better when it comes to Mom giving into fixing foolish mistakes.
Posted by: Nomen at 08/20/2009 08:58:42 AM
About half of my coworkers have boomerang children as the result of divorce which is itself an economic hardship. Janet,would you care to offer some financial advice directed to this apparently much larger group? Perhaps you haven't faced this yet with your three but it is very likely that you will in the future.
Posted by: squzz at 04/09/2010 01:16:13 PM
My stepdaughter moved in with her aunt at the age of 17. Why? Because the aunt was single and the 2 of them ate out and shopped all the time AND, she did not have chores. Her chores at home were to wash the dishes. Hard, huh?...Now, the aunt has a boyfriend and they have thrown out the stepdaughter who asked to move back home. She is 22. She works full time, dropped out of college and bought a puppy days before she moved home. She has been there almost a year now, has not paid a cent, has done noting to help out and even though she works at a pet store, does not even contribute to the care of her puppy. Not only that, she has hooked up with a boy and spends all her time with him at his mom's house....Knowing she can get daddy to give in and using me. I am kind hearted and hate to kick her out (won't be allowed to) but I can't take it anymore.