Children Can't Afford to Fly the Nest? Here's How to Help

A young man smiles as he talks with his father on the sofa while his mother smiles in the background. — (Image credit: Getty Images)

The cost of living is rising every year, making it increasingly common for adult children to live with their parents.

One in three U.S. adults aged 18 to 34 currently resides with at least one parent. While some live with their parents by choice, this trend reflects larger economic and social changes .

Living with parents is one way adult children seek support while working toward financial stability, though the type of assistance they need can vary depending on their age or stage of life.

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In almost 20 years of working in financial services, I’ve encountered a wide range of scenarios. However, there are four best practices I plan to implement with my own children one day.

Set a timeline for 'rent-free' stays

One of the hardest yet most valuable lessons I learned came when my dad “kicked me out.” We had always agreed that I would live at home rent-free for one year after graduation to save money and build a financial reserve.

After that, I was expected to move into my own place. When the one-year mark arrived, I had just accepted my job at Halbert Hargrove, but I hadn’t started yet. It was time for the hard conversation: my dad and I discussed the importance of sticking to our agreement.

I was very upset at the time and loved being at home, but looking back, I see that my dad was right. It was time for me to spread my wings, learn independence and take on the responsibilities that come with living on your own.

In the end, it was exactly what I needed. I moved in with my best friend and figured out how to live independently. Learning to live within a budget, paying bills and making sacrifices was challenging but essential for my long-term success and independence.

So, the lesson is that a “free stay” shouldn’t be indefinite. It’s easy to get comfortable, but in the long run, as tough as it may be, we need to let our children go do their own thing.

There are economic exceptions, such as more than half of Gen Z adults saying they don’t make enough money to live the life they want due to the high cost of living.

This statistic underscores the harsh realities many young people are facing, particularly as housing, healthcare and education costs continue to rise.

Set clear boundaries and requirements

If you decide to support your adult children, I highly recommend setting clear boundaries and requirements.

For example, if they are asking for financial help to return to school, consider requiring them to work on campus or get a job to supplement your support.

Additionally, you might set expectations, such as maintaining a minimum number of classes or a certain GPA.

A study by Savings.com said 61% of adults living at their parents’ homes don’t pay rent or contribute to any household expenses.

If they ask to move back into your home, set the guidelines that they will pay for certain utilities, be responsible for certain chores, or even pay rent or contribute to the mortgage.

It’s important for them to actively participate in the household and not get too comfortable.

If they have accumulated credit card debt, create a plan for them to pay down a certain percentage each month. To aid in building healthy financial habits, you could also help them develop a budget.

There are many scenarios that could arise, but I believe each person should have skin in the game. Parents should feel that their support results in tangible outcomes, while adult children should take responsibility and actively work toward their goals.

Ultimately, it’s important that both the parents and children benefit from this arrangement.

Reward saving activities

PBS research shows that teaching children about money equips them with a financial education that has been linked to lower debt levels, higher savings and higher credit scores into adulthood.

Inspired by this, I learned from a family friend the practice of matching the money my children save, which has proven to be very helpful. If they choose not to spend the money they earn and instead decide to put it into their savings account, we match whatever they save.

For context, they run a small recycling business where they collect recyclables from our household and our neighbors. Once a month, we take them to turn in the recyclables for cash, and they usually earn between $40 and $60.

If they choose to put that money in their savings, then we match that number, which helps them develop good financial habits early on.

The same concept can be applied to 401(k) contributions for your children who are just starting their careers, as early investing is crucial for long-term success.

Similarly, if they are saving for a home, you could encourage their efforts by charging them rent, but instead of spending it, you can save and invest it as a future contribution to their own home.

Provide a loan

Another tactic is providing adult children with personal loans for significant investments like furthering their education, purchasing their first home or starting a business.

However, this strategy may not be suitable for everyone. Loans tend to be more successful if the child has already demonstrated trustworthiness and strong saving techniques, and has proven to be reliable in their financial acumen.

Supporting your adult children is not a requirement, and sometimes, it’s not necessary. However, if they do come to you for help, it’s important to know your stance in advance and set clear boundaries on how much you are willing to help.

If you have a partner or significant other, whether they are your joint child or not, being on the same page and maintaining transparency is crucial. If you’re in a position to help, that’s great, but if it doesn’t align with your personal budget or longer-term savings goals, that’s completely OK, too.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Kelli Kiemle holds multiple roles with Halbert Hargrove. As Managing Director of Growth and Client Experience, she sets the tone for the quality and character of Halbert Hargrove's client service relationships. She also manages the associate wealth advisers. Kelli is also responsible for overseeing the firm's wide-ranging marketing and communications initiatives, including their mentor program. She is also the Co-host of Halbert Hargrove's Fearless Money Talks podcast.