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Adult children are increasingly moving back to their parents’ homes after starting out in the working world.
They are known as the Boomerang Generation and are usually between 18 and 34 years old. It’s a way of cutting costs until they manage to get on their own feet, but in practice it doesn’t always work that well.
Sometimes parents are too lenient with their kids and keep paying for their expenses instead of taking care of their own savings. The kids, on the other hand, feel they get treated like teenagers rather than adults.
It can result in quite a few niggles. If you’d like to help your child financially at this stage of their lives, boundaries will have to be set – for both the parents and the child.
You’ll need to have an open chat about it, and following these three guildelines will be useful.
MAKE NEW RULES
You no longer have a minor living with you, so new rules should apply. Don’t feel guilty if you’re not doing everything for them like when they were at school.
The situation is completely different now and they must learn to stand on their feet.
- Set goals. This could include, for example, that you’ll support them until they have a job, or until their student debt is paid off. You should set timelines so it’s clear for how long the child will be staying.
- Let them pay rent. The amount can be determined according to their income. The more they earn, the more they’re able to contribute.
Some parents save their child’s contribution and give it back to them later when they want to buy property or a car, but in most cases parents need the money to cover additional household expenses.
Also divide household expenses like electricity and groceries.
- If your child doesn’t earn a salary they should contribute in other ways, for example by seeing to the garden, helping younger siblings with homework or ferrying them around, or painting the house.
This work must be done well enough so you don’t have to pay someone else to do it. If they’re paying only a small amount in rent, they could do more household chores as an additional contribution.
MANAGING FINANCES 101
The objective is to make your child financially independent. It can only happen if they learn to look after their own finances.
- Help your child to budget. If you butt heads about this, or you don’t have the necessary know how, ask a financial planner to help you.
If you’re battling to find someone, ask a colleague or friend who manages their finances well to recommend someone. Your child may budget for entertainment only after important expenses have been paid.
Make sure they understand never spending more than they earn.
- They shouldn’t make new debt. Their focus should be on paying off existing debt, like student loans, before taking on additional debt, for example for a car.
Explain that they should not fall behind with debt repayments as it will give them a bad credit record.
- If you want to help your child financially, reward them when they’ve met their savings target rather than taking care of various expenses for them.
Your child could set their own savings targets or do it with the help of a financial planner. Instead of making a habit of paying their cellphone account, reward them with a financial contribution when they’ve made their savings target.
- If your child doesn’t have a job, help them to find part-time work while they’re living with you. Any experience they can get could be useful in landing full-time employment.
TAKE CARE OF YOURSELF
It often happens that parents try to help their adult children while their own finances suffer in the process.
- Don’t pay off your child’s study loan or debt if it’s going to set back your retirement plans.When a child moves back and contributes, it can help reduce your expenses. However, it often leads to greater expense for parents.
Consult a financial planner to make sure your retirement planning is on course. If you’ve saved too little, you should be cutting expenses yourself.
Explain to your child that if you don’t save enough for your retirement you’ll end up becoming their financial responsibility.
- Your child may think you’ve saved enough for retirement or that you are well-off, and therefore expect you to help them with their expenses.
This is why a frank conversation is so important. Draw up a family budget so everyone can see what expenses there are and how much they need to contribute.
- Revisit the rules from time to time and discuss it openly. Do it in a way that is sensitive to one anothers’ feelings.
They should know what expectations you have of them and what they can expect from you. But be careful not to come across as a know-it-all who’s constantly giving advice.
GET MORE ADVICE
- Financial planners: www.fpi.co.za and www.fia.org.za
- Understanding financial terminology: www.investopedia.com and www.ncr.org.za
- Online calculators on the websites of banks and investment companies can help you work out saving plans and debt repayments.
