Budgeting for Boomerang Kids
The pandemic has disrupted business as usual – in our professional lives and even in our homes.
Under many roofs across our country, this has included welcoming back a “boomerang” adult child after college graduation, a job loss or other setbacks. In fact, more than 50% of young adults under 29 are now living with one or both of their parents, according to analysis of federally collected data.
While the arrangement may not have been in your – or their – original plans, there are prudent practices for creating a family budget, protecting your retirement plans and helping your child take the next step.
Start a Conversation
Even while hosting an adult child unexpectedly, budgeting can still be valuable for building savings, paying off debt, staying on track for retirement and setting a positive example. Chances are, you and your boomerang child want the same thing for their future: for them to lead successful and independent lives.
Here are insights for creating a new family budget that protects your bottom line.
Agree to an agreement.
Get on the same page. Start a conversation. Come up with a plan of action that balances your priorities, reflects your values, and sets clear goals and timelines for how they will take their next steps.
- Shared responsibility. Come to an understanding about how your child can comfortably contribute to the household budget. Perhaps a flat rate is appropriate.
- Set goals toward their independence. This could be anything from them applying for a certain number of new jobs a week or saving enough monthly to soon put down a security deposit.
- Following a family budget. Everyone needs to do their part. Divide expenses into easy-to-understand categories that allow you and your child to stay within the boundaries of buying and using necessary resources, such as food or utilities
- Write it down. Every formal financial arrangement requires paperwork, and so should creating a household budget. This will help validate the agreements you make and serve to clarify expectations and encourage accountability. Be open to your children’s ideas.
- Establish ways to see if it’s working. Having your child stick to a plan is great practice for them to honor financial agreements that they will later strike in their own lives.
- Encourage good financial habits. Make sure your adult child knows and follows the basics. They’ll be that much closer to being on their own.
"While the arrangement may not have been in your – or their – original plans, there are prudent practices for creating a family budget, protecting your retirement plans and helping your child take the next step."
Set expectations early.
Often, gaining financial independence is not a one-step process. Together, you can track their progress along the way.
Share your life experiences.
What were the savings and investment strategies you wish you’d known at their age? Tell them about buying your first car, or about the moment you decided that your first house was the one.
No matter what, remember: Keep the conversation going. Check in – with each other and on your accounts.
Focus on positives.Celebrate what’s working. In many cases, success is not an all-or-nothing moment – it’s a steady process with many steps.
Bills come due monthly.So should check-ins. To make sure that ends are really meeting – and that savings goals are being hit – take a monthly look at the numbers. It can be fun: Plan around a family meal or game night, or celebrate with a dessert.
Tend to your own finances - and retirement.
Speaking of retirement, create a retirement checklist, which can help you correct course if need be. Other suggestions:
Keep saving. The growth of your nest egg does not need to stagnate. The family budget should be designed to keep your financial goals on track.
Be smart about taxes. Explore options to help offset the impact of having your adult child at home.
Talk with your banker. While reviewing family finances, it may be the perfect time to meet with one of our professionals.
Lead by example.
You’ve learned a lot over the years. You’ve made some great decisions, and some of the other kind too. That’s OK. What you have are the lessons learned during your own financial journey.
Old rules don’t always apply. Not everything that you went through to establish a financial foundation would necessarily apply today. Be thoughtful about the challenges unique to young people.
Stay organized. Practice what you preach. It never hurts to keep financial knowledge fresh in your own mind; it might help you return to some of the basics with your own financial wellness practices.
You’re in This Together
Over the years, you’ve found ways to navigate choppy waters. Whether it was an economic downturn or during the ongoing pandemic, you know the power of family sticking together.
Crafting a family budget – and sticking to it – while aiding your children’s progress toward independence can help your family embrace this new phase of your relationship.