Ground rules for adult children returning home

TORONTO — Certified financial planner Rona Birenbaum says it’s becoming common for her to walk clients through the emotionally fraught terrain of providing financial support to adult children returning home.

The Toronto-based founder of Caring for Clients attributes the growing phenomenon to a perfect storm of factors.

“The current generation of parents on the whole are more financially secure than the previous generation, and then couple that with their children for whom education has become a lot more expensive,” she says.

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“They’re often graduating with debt and they’re also entering a workplace that is more challenging to access and with less certainty of income and benefits.”

Data from the National Household Survey bears this out. In 2011, 42 per cent of the 4.3 million young adults aged 20 to 29 lived with their parents compared with 27 per cent in 1981.

Birenbaum says the difference between a parent assisting a child through a short-term transition versus enabling them to remain mired in dependence boils down to a mature dialogue and defined objectives.

For certified financial planner Trevor Van Nest that starts with an adult-to-adult conversation.

“Have the grown child express their plan,” says Van Nest, founder of Niagara Region Money Coaches in St. Catharines, Ont. “That might not be something they’re able to articulate immediately but it’s something that should be revisited within a couple of weeks of an arrangement being established.”

But parents must have realistic expectations about how long it may take a child to be completely self-sufficient, Birenbaum adds.

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“There needs to be a 12-month and a 24-month plan,” she says, ones that are revisited regularly to make sure child is following through on set goals.

If a returning child is looking for a job, Van Nest says parents may opt to not charge rent for the first three months of an arrangement after which rent might be $400 a month. Part of that deal may involve the child finding a temporary “less glamorous” job to cover some of the extra household expenses as they work toward finding something in their field of choice.

In the meantime, Van Nest adds, be sure to establish what the adult child’s non-financial contribution is going to be from a household maintenance standpoint — whether that’s cooking, cleaning or walking the dog.

Birenbaum says even if parents don’t need any additional income from a returning child, charging even a nominal amount for rent as soon as possible is important.

“They’ll need to be able to afford rent at some point if they’re trying to get their life in order,” she says, adding that parents may save the money to gift to the child when they move out.

“That money could go toward helping to fund furniture for a new apartment or some other living expense. But keep it a secret for now.”

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Birenbaum says another part of negotiating a plan with an adult child returning home is having them develop a budget, as this will reduce potential friction.

“It’s frustrating for parents to be paying for things and then see their kids at the bar. So if the child says, ‘This is my budget for the next six to 12 months,’ that will help guide the parents to cover how much assistance they actually need.”