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Grown Children Living With Parents: A Guide to Smart Finances

Erika Napoletano

September 2017

Home can be a safe place to land. But whether it's to save money or bide time before a big geographical or career move, having a grown child move back home brings with it financial considerations that are important to think through. How do both you and your child make the adjustment work? Here's a handy guide to make grown children living with parents a situation that works for everyone financially.

Create a Rent Account

For kids, saving money can be one of the biggest benefits of moving back home. To help your kids save, create a rent account and have them pay into it each month. The monthly amount can be whatever you deem appropriate, but will likely be significantly below-market rate.

Depending on your situation, you may want to keep the money to use on household expenses. Or you may consider negotiating terms for returning the money to your child when they move out. You might also use RentTrack or Rental Kharma to help your kids improve their credit score through timely rent payments. No matter what option you choose, not only are you creating a savings account, but you're also encouraging solid financial habits.

Utility Contributions

More people in a house naturally means using more water, electricity and gas. You might even need to upgrade your internet plan. Have your grown children contribute a flat amount each month to offset these costs. Even when grown children living with parents are trying to save money, living at home and paying a fraction of the utilities is a much better deal than paying 100 percent of them on the open market.

To ensure what you're asking for is the right amount, establish a baseline for each utility using the past 12 months' "empty nest" utility bills. Then, ask your kids to pay the overage going forward. If your water bill averaged $75 per month for the past 12 months, for example, your offspring would contribute whatever amount the bill is over that baseline of $75.

Consider Your Retirement Savings

You might be on the road to retirement when your grown kids decide to move back in. But how will this impact your retirement savings? According to The New York Times, about 40 percent of 22- to 24-year-olds receive some sort of financial assistance from their parents, even when they're not living at home. The study also estimates that this support averages $3,000 per year. That can take a big chunk out of your retirement savings. By following the guidelines above and having your grown children make financial contributions, you'll be able to continue saving for retirement and potentially use the money paid by your kids to strengthen those coffers.

The bottom line is that home can be a safe place for grown kids to regroup, save some money and plot their next big life step. By discussing finances openly and honestly before the bedrooms fill back up, you can establish timelines, have a say in how money matters will work and protect your financial future while helping your kids strengthen theirs.

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