When Amanda Claypool was 28, she left her government job in Washington, D.C. and returned to her parents’ home in upstate New York while she considered her next move. Then the pandemic hit, and her temporary comeback lasted longer than she had planned.
Living with her parents for a few months “helped me have more flexibility to switch to a new career,” says Claypool, who now works as a content creator in Asheville, North Carolina. Her parents covered her food and housing expenses. In return, she helped them jumble up and sell around $10,000 worth of vintage toys and collectibles online.
Claypool’s decision to return home is becoming more common. The Pew Research Center found that a quarter of American adults aged 25 to 34 lived with their parents or other relatives in 2021, and that the proportion of young people who do so has risen steadily over the past 50 years.
Stephanie O’Connell Rodriguez, host of the Real Simple “Money Confidential” podcast, has spotted the trend. “Even before this latest round of inflation, we have seen a large proportion of millennials return to their parents and stay at home longer. The pandemic has accelerated that,” she says.
While returning home can provide financial security for young people, it can also negatively impact their parents’ finances and hinder their own growth towards financial independence. Here’s how to lead an intergenerational life that benefits all involved.
Think about what you really want
Parents of young people are often at a stage in their lives when they are ready for a change, such as retirement. Moving children home “may not be an ideal situation for them,” says Lorna Saboe-Wounded Head, a family resource management specialist at the University of South Dakota. “Parents should consider this decision before inviting them home.”
Consulting a financial coach or advisor about your readiness for retirement can help. Making a budget to estimate your current cash flow and how it will be affected by the arrival of an additional guest can provide additional information.
Once you’ve decided to take an adult home, it’s time to set ground rules, says Julie Lithcott-Hames, author of Your Turn: How to Be an Adult. Start by talking frankly about what each party expects. “Explain: “Now you are older, everything has changed. … We are happy to support you, but let’s talk about what we expect from everyday norms and behavior,” she says.
In many cases, she says, it makes sense to treat young people like Airbnb guests: they’ll use the kitchen and bedroom, but do their own laundry and some household chores and pay rent. Barring mental health issues or another crisis, the young adult should also be expected to invest in financial support. “If they can’t pay rent, then maybe they can pay for groceries or a phone bill,” she says.
Provide details in writing
Once you agree to the adult child’s financial contribution, Rodriguez says, put those details in writing. “It’s helpful to have something to refer to or go back and fix,” she says.
David Bredehoff, Professor Emeritus of Psychology and Family Studies at Concordia University in St. Paul, suggests setting ground rules in a formal contract. The document should include details such as who does the laundry and pays for utilities, and whether quiet hours are allowed or guests are allowed. “Otherwise, it’s easy to slip back into old roles,” he says, adding that he has this tendency even at the age of 71, when he lives with his wife’s parents in Florida for several months of the year.
Rachel Bronstein, an accredited financial advisor and founder of Life’s Jam, a Miami-based coaching company, says she encourages parents to keep track of their spending when they share a home. Sometimes, she says, they don’t realize how much of their money goes into extra food, utilities and subscriptions. “They probably need to go back to their adult kids and say, ‘Hey, can we get this? I pay for a lot,” she says.
If parents do not prioritize their own savings and retirement, they may have to turn to their adult children for financial help in the coming years. “The greatest gift is to teach financial independence,” she adds.
At the same time, Rodriguez says, a young adult returning home must transfer all the savings generated from this agreement to a savings account or student loans every month.
Have an exit strategy
Bredehof suggests discussing directly how long an adult child plans to stay at home. “Talk to them about what you are planning to look for a job? How many hours per week will you spend looking for work? Do you need professional help?”
This conversation also helps the child. Says Claypool, an Asheville-based content creator: “Make a plan for yourself so you know when to leave, otherwise it’s so easy to stay.”