How to help adult children who move back home

Navigating budget—and lifestyle—changes in a multigenerational household.

Just when you’re ready to convert your child’s old bedroom into a craft room or home theater, there’s a change in plans. 

Some 59.7 million U.S. residents, or 18% of the population, live in a multigenerational home—defined as two or more generations of adults mainly ages 25 and older, or grandparents and their grandchildren under 25, living under one roof—according to a March 2021 Pew Research CenterOpens in new window analysis of U.S. Census data. That’s up from 58.4 million in 2019 and four times more than the number of multigenerational households in the 1970s.

What’s fueling the growth of this family dynamic? Financial considerations are among the leading reasons, researchers say. These days, that could be due to a job loss, crippling student loan debt or no luck finding a post-college job that can keep up with today’s inflated cost of living. 

Whatever the reason, the question for parents is, can you make the arrangement work? To help adult kids without sacrificing your own financial well-being or peace of mind, there are steps you can take.

Why are adult children moving back home? 

There are lots of reasons, but chief among them are financial issues: Four in ten adults in multigenerational homes cite them as a major reason; 28% more call them a minor reason.

Four in ten adults in multigenerational homes cite finances as a major reason; 28 percent more call them a minor reason.

Establish boundaries

Having an idea of how long the arrangement may last will help you plan for it, financially. “Set expectations up front. Will they be staying for a set time, say 6 to 12 months? How long do they think they will need?” says Rob Stevens, a Financial Planning Strategist with TIAA. They may not know, or the answer may change over time, but it’s good to start with some idea so you both can plan accordingly.

Childcare is a driving factor in a quarter of multigenerational homes—understandably, given the high cost. But while you love your grandchildren, it’s important to be transparent about how and how much you want to help, says Stevens. If you don’t always want to be the assumed babysitter, say so at the outset.

Be realistic about what they can contribute

Don’t avoid the conversation about how much your adult children will help with the household finances. Most adult children living with a parent pay less than half of the rent or mortgage, Pew reports—30% pay none of it.

Get all the expectations (and hopes) out on the table. For example, if they’re unemployed now, what could they see themselves contributing once they get a job? Even if you don’t expect them to pay for anything in the short term, you may have different feelings about an extended stay.

Be transparent about your own situation 

Next, sit down with your own budget and decide what you really can and can’t do. “Expenses for food will go up, especially with inflation. You’ll be using more heating and cooling, so those costs will go up,” says Mark Schrader, a Financial Planning Strategist with TIAA. And if you’re being asked to take on extra debt and bills too, those expenses will add up quickly.

Also, be transparent. “Someone in their 20s may think their parents are loaded. But if you have your own struggles, let them know. Or it could be that you have financial goals that you don’t want to disrupt because you don’t want to be a burden to them years later,” says Stevens.

It’s okay to say no to taking on more than you can handle. “Will helping them mean you are unable to contribute to your retirement? Or maybe you aren’t in a financial position to take on anything extra. Prioritize your future,” says Schrader.

Put a plan on paper

The best way to be sure everyone is on the same page and stays that way is to put all the agreed-upon details in writing, being as specific as possible about target dates, dollar amounts for contributions to utilities or rent, and so on.

If you move forward, develop a plan for dealing with additional expenses that arise over time, so they don’t just fall to you. “Everyone should rethink their budget and see where there is fat that can be trimmed,” says Daniel Ruppel, a Financial Planning Strategist with TIAA. 

Look for the positives

Combining households can bring opportunities for you, as well. While you might provide free babysitting, your child could take care of yardwork or housecleaning that you previously hired out. “If you’re busy working, they can run errands like going to the grocery store and cooking, so the family doesn’t spend money on takeout,” says Stevens.

The arrangement also can be a teachable moment. Since finances are the topic du jour, it opens the door for discussions about smart spending, saving and investing. You can ask your child about their financial goals or recommend they find a debt counseling service. If you’re able, you might even decide to take whatever “rent” they’re contributing and sock it away to help them move on to their own place a bit sooner, or meet a financial milestone like paying down debt.

And of course, don’t get so mired in the money details that you forget about the joy of having your kids around. “Take advantage of this increased time with your children and grandchildren,” says Ruppel. “This can be priceless.” 

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