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They're Back! How to Manage Your Finances When Kids Boomerang Home

Moving home after college has become the norm and more adult children are living with their parents than ever before. Student debt, the cost of living, a lack of jobs and even parents avoiding an empty nest are all contributing factors to boomerang children. So how do you make this living situation work? Here are five tips for dealing with this “failure to launch” effect:

  1. Make it a learning experience.
    First determine why they want to return home. Is it strictly a financial need? Once you understand their position, you will be better able to counsel them on money management situations. If you see your children struggling to make a living, support themselves and succeed at their goals in life, start a conversation about personal finance and help them create goals. Bring them to the credit union to learn about transactions, loans, and credit scores.
  2. Create a game plan.
    Before they step foot in your house, create an outline of expectations. Put it in writing like a contract and have them sign it. Some of the suggested topics could cover house rules, paying rent, doing chores, setting a move-out date and establishing personal goals for your child (gaining employment, saving money, looking for housing, etc.).
  3. Share household costs.
    One way to ease the expense of opening up your home is to have your boomerang kids pay rent, a portion of utilities and part of the grocery bill. It could help you avoid overspending — and help your kids be prepared to expect these expenses when they move out on their own. If you can afford it, consider setting aside some of your kids’ rent payment to return to them when they’re ready to move, or to help them pay off debt.
  4. Be wary of paying their way.
    If you loaned a child money that they can’t repay, it could strain your relationship. Also think very carefully before agreeing to cosign a loan. While it can help your child establish credit, cosigning could put you on the hook for a loan your child isn’t ready to take on.
  5. Consider their future (and yours).
    College graduates often have two things in common: They have bills to pay, and they need money now. So long term goals such as retirement don’t seem as important. This is the perfect time to start that discussion. If your child is working and their employer provides a 401(k) match, encourage the child to participate in the company plan. Even if there is no match, your child should contribute at least the minimum. If the employer doesn’t offer a retirement plan, persuade your child to save in a Traditional IRA or Roth IRA. Meet with Investment Services to talk about their options. Consultations are free and you may just learn something in the process.

Having a child who has boomeranged home may not be ideal, but with tens of millions of American families in this exact situation, it’s definitely more common than ever before. By setting expectations and helping them save money, you can give your boomerang child a smart start on a successful financial life.