Welcome to the 8th Smart Money Debate at ReadyForZero! To see the other side of this debate, read Jana’s post: Why You Should Charge Adult Children Rent. And then let us know which argument was more convincing!
This post was written by Melissa, a freelance writer who writes about both personal finance and organic living. She blogs at Mom’s Plans, where she shares her financial adventures and love of food despite many food intolerances.
With today’s economy, more and more kids are returning to the nest after college, or, in some cases, never leaving. They are called boomerang kids, and their numbers are growing. According to the Pew Research Center, “Among 18- to 24-year olds more than half (53%) live at home or moved in for a time during the past few years.”
Even more surprising, adult children moving in with their parents seem to transcend socio-economic boundaries. “Parents with annual household incomes of $100,000 or more are just as likely as those with incomes under $30,000 to say their adult child has moved back home because of economic conditions.”
The knotty issues that may come up include what responsibilities these grown kids should have at home as well as if they should have a curfew or call if they are going to be out late. Another potentially difficult issue is if these grown children should pay rent.
Why People Argue You Should Charge Rent
Opponents argue that grown children who move back in should pay some form of rent. These parents often don’t charge their kids as much as they would pay in rent if they lived on their own, but they do make them pay something. My own mom was like this when I moved in for two years between undergraduate and graduate school, and I didn’t mind paying the $200 in rent she charged because I knew her money was tight, and I knew I couldn’t live somewhere else that cheaply.
However, in many cases, not charging grown kids rent may be the better decision.
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Why It Is Better Not to Charge Rent
…unless you are being take advantage of (obviously). I can hear opponents argue that by not charging your children rent you are spoiling them and teaching them that they are entitled to a free ride – that you are not teaching them responsibility.
Well, if it so happens that your son or daughter is going out every night and wasting his or her money on dinners out and outings with friends, then yes, I would agree that he or she can afford to pay rent.
However, most adult children are forced to live at home because of challenging financial circumstances. By now everyone should realize that the U.S. economy has not been particularly kind to recent college and high school graduates who are looking for work, and many of these young adults are living at home to avoid going into debt (or adding to their existing debt).
These are the people I’m referring to – the ones who move back home because of a legitimate financial need. CNNMoney states that people between the ages of 20 and 24 currently face an unemployment rate of 15%.
And even those who are employed are often underemployed.
I moved back home 15 years ago after the only job I could find with my English degree was a secretarial job at a janitorial supply company making $16,000 a year. Meanwhile, I had $20,000 in student loans to pay off. While I don’t fault my mom for having me pay $200 for rent, my money was extremely tight.
Had I instead been able to use that money to pay down my student loans or save for graduate school, I would have been in a much better financial position when I did go on to graduate school two years later. Instead, I just scraped by the entire time I was home, and when I went to graduate school, I had to take out another $10,000 in student loan debt.
Set Boundaries for the Perfect Situation
If you still want to charge your adult child rent if he has a legitimate financial need to move back home, consider a kinder way to do so. I see two good solutions.
First, don’t charge him rent when he first moves in. Perhaps give him 6 to 12 months rent free so he can get on his feet and find a good job. After 12 months, he will need to pay rent. Set the amount before he even moves in. After 24 months, maybe he will have a significant rent increase. Rather than limiting his progress by charging him rent in the beginning when he is struggling the most, you set clear expectations, and he can ideally pay some money to you after a year when his finances are better.
Another alternative is to charge rent from the beginning and set it aside without your child knowing. I lived with my mom for 2.5 years. At $200 a month, that is $6,000 I paid her. If she had set that money aside and given it to me before I went to grad school, I could have saved myself an additional $6,000 in student loans (if you need help paying off debt, don’t forget to try out ReadyForZero). Some parents like to set the money aside so when their children move, they have the money for their rental deposit.
Choosing to charge your adult child rent is a personal decision, and you have to do what is best for your family. However, if my kids move back home after college and need financial help because of underemployment or unemployment, I am certain that I will not charge them rent.
What about you? Share your opinion in the comments below.
To see the other side of this debate, read Jana’s post: Why You Should Charge Adult Children Rent. And then let us know which argument was more convincing!
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