Over the past year, the pandemic has definitively disproved the old adage, “you can’t go home again.”
For nearly 27 million young adults, going home again became the best survival option as colleges closed or transitioned to a remote model and employers laid off massive numbers of staff.
In fact, Pew Research reports that in July of last year 52% of young adults resided with one or both of their parents. (For comparison, that percentage is 4 points higher than the corresponding one recorded during the Great Depression.)
Adapting to unexpected living situations comes with a variety of challenges. While some parents may be glad to have their kids back in the nest (and some kids may be grateful for that safety net), cohabitating with grown children creates practical space issues – and a bevy of interpersonal landmines! Successfully navigating who does their Zoom calls from where, whether coming in at 2AM is acceptable, and how chores should be divvied up takes patience, creativity, and respect from all parties.
Beyond these logistical and behavioral issues, there’s also the very real issue of finances.
Conversations about money tend to be complex and somewhat volatile in the best of times. During a pandemic, they can become stressful very quickly. But they are also very important.
According to a survey in USA Today, approximately two-thirds of parents say they are providing financial support to their adult children, including helping to pay for everyday expenses like gas, groceries, and cell phone service. That same survey found that 21% of parents are helping adult kids with healthcare costs, and 11% are assisting with rent and mortgage payments.
While shouldering increased household expenses to cover another mouth or helping out here and there on various expenses may not seem like a huge deal at first, the cumulative effect on parents’ budgets and ability to save for their own future can be substantial. In some cases, parents are forced to dip into precious retirement savings that cannot easily be recouped.
If you are a parent in this position, it’s important to remain clear-eyed about not only the present moment, but also what lies ahead in the not-too-distant future.
The following tips can help open the financial conversation, establish appropriate expectations and boundaries, and even set your kids up for greater financial independence on the other side of this experience.
1. Commit to open and honest conversations.
The first step is acknowledging the need for frank conversations on financial topics. We are not culturally wired to initiate these kinds of conversations, but they are absolutely critical to ensuring that everyone understands the lay of the land. This may involve getting down to brass tacks about what you can and can’t offer in terms of financial support. It may mean having hard talks about the difference between “wants” and “needs.” And it might even require you to get specific about your own retirement needs and plans in the context of the current emergency.
2. Clarify expectations and set boundaries.
Once you’ve got the ball rolling, you’ll need to dig beyond generalities to nail down exactly how you plan to address financial needs as a team. Will you expect your child to contribute to the household in some way, and—if so—how and how much? While most parents choose not to charge their adult kids rent, that can make sense in some circumstances. Most of the time, parents ask kids to help defray day-to-day living expenses like grocery bills and utilities. Or, if your child is currently unemployed and unable to contribute financially, you may ask them to help out in other ways with chores, home maintenance, or running errands. This is also the time to set boundaries regarding what you are and are not willing and able to pay for. For instance, while you may be able to foot 100% of the core household expenses, you may not be willing to fund a weekend ski trip or subscriptions to every streaming service known to man.
3. Be consistent about accountability.
Unfortunately, it’s not enough to set expectations and boundaries once. In all likelihood, you will need to be vigilant about monitoring adherence to the rules you’ve all agreed to. It’s too easy for parents and kids who have moved back home to fall back into old habits and routines from the days when the kids were fully dependent. Keep track of how things are going. Think about scheduling regular check ins. Keep those lines of communication open, and—when necessary—adjust course to keep everything and everyone on track.
4. Keep your eye on the future.
Even in moments of immediate crisis, it’s important to keep the future in mind. This applies to both you and your kids. For parents who are stepping up to help out, this means paying attention to how the added financial burden is affecting your ability to save for your own retirement or even tap into retirement savings.
Weigh the pros and cons of each decision carefully.
- Is it worth it to pull money out of a 401(k) now, or will the penalty be too steep later on?
- How will reducing contributions to your IRA now affect your ability to retire comfortably?
- Will today’s generosity mean you need to rely more heavily on your kids tomorrow?
Kids may need to think about how to pay off college debt in the long term, or they may need to put together a savings plan that will help them get back on their feet once the pandemic is over.
5. Have an exit strategy.
Finally, it’s important to be proactive about thinking beyond your current situation so you can devise a strategy for transitioning out of it once that’s feasible. In these difficult times, we often feel justified in putting off difficult tasks like life planning because sometimes just getting through the day requires a Herculean effort. But, working with your kids to develop some steps that will help reestablish their independence is a necessary part of preparing both of you for that day.
It’s not all bad news! Even in crisis, you can find opportunities.
While having your kids come home to roost may cause some tension and financial strain, there is a silver lining beyond the chance to spend some extra time with your children.
For example, having the necessary conversations about current and future finances doesn’t need to be all doom and gloom. Instead of coming across as a lecture or an ultimatum, these talks can open the door to productive conversations that help you teach your kids valuable financial skills.
And that’s a gift that will stay with them their whole lives.
Even something as simple as creating a budget together is a great first step, and from there you can talk about ways to create long-term stability, develop a healthy relationship with money, and even prepare for retirement.
Through it all, try to maintain your sense of humor and patience.
Remember, this isn’t just hard for you. Your kids probably weren’t planning on having to move home or put off their career search because of a pandemic. The key to getting through the challenge is to work together and support each other however we can.