"Mom, I'm home ..."
The term "boomerang children" is commonly used to refer to adult children who leave home but then at some point return to live with Mom and Dad. The trend is clearly on the rise, with job insecurity, a troubled economy, increasing college debt, and the cost of housing all driving the boomerang phenomenon. Also, sociologists blame a general prolonged adolescence, where children over rely on their parents for money and help with everyday life decisions. This is not the sort of legacy planning that we often plan for.
A mixed blessing
Boomerang children can be a mixed blessing for their parents, both emotionally and financially. Just when parents may be looking forward to a life on their own, their kids are back at the dinner table. While the extra company might be nice, experts agree that the situation works best when expectations are clearly laid out. Here are some issues you may want to discuss with your child at the outset:
How long will your child live at home? The answer may depend on the reason your child moved back home. A child at home to save money for graduate school may only need to be there for a short time, while one who has lost a job and had to give up an apartment may take longer to get on his or her feet. Although most experts suggest establishing a time limit and sticking to it, the ability to do so may depend on the circumstances.
Will your child pay rent? Charging your child at least a nominal amount for rent is fair and appropriate. You may also consider charging for your child's portion of the phone bill, grocery bill, and car insurance bill if you add your child to your policy. This can serve as a wake-up call to real-world expenses.
What will the division of chores be? Some adult children may revert to childhood roles and expect their parents to do all the cooking, cleaning, and laundry. Establish clear guidelines about chore responsibilities and don't be afraid to ask your child to pitch in.
Can your child come and go at will? Most children who have been on their own for a while expect the freedom to come and go as they please. If your child is responsible and contributing to household expenses and upkeep, it's probably reasonable to allow him or her this flexibility, though make sure to discuss any concerns you might have.
Don't neglect your own financial future
Helping your child in a time of need is admirable, but you shouldn't sacrifice your own financial goals and security. Decide how much you want to help, but don't make the mistake of providing more financial support than you can afford, especially if you are only a few years away from retirement.
Generally, it's unwise to get too entangled in your child's finances by co-signing loans or otherwise lending money, unless it's absolutely necessary. But this doesn't mean you can't be a good financial teacher. Help your child learn to track his or her monthly income and expenses, prepare a budget, pare down to one credit card (to be used only for emergencies), spend wisely, start a savings program, and restructure debts, if necessary. Remember, your child will become more financially responsible only when you're not there to bail him or her out at the first sign of trouble.
Sit back and (try to) enjoy the ride
Every family with a boomerang child handles its situation differently. But with clear expectations and rules, as well as lots of love and a sense of humor, the extra time spent with your child may just turn out to be an experience you'll all look back on fondly.
A child returning to home is part of the financial planning process. I’m very interested in how we handle boomerang children. Please send me an email at Jpatrick@stage2planning.com or contact us through our contact us button.
This article was created by Forefield for use with permission by Stage 2 Planning Partners