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Q: My twenty-something child has decided that she wants to move back home. I like my new empty-nest lifestyle, but I want to help her out. How can I balance these?

This is becoming a common quandary as more and more parents find that their fledgling adult children aren’t quite ready to fly. According to the Pew Research Center, roughly 29 percent of young adults ages 25–­34 are now living with their parents. And it’s not because the kids are necessarily looking for an easy ride. The economy and job market are just making it a lot harder for kids to take off on their own as early as we (or they) might wish.

Interestingly, the same study found that kids and parents both generally say that living together at this stage of life isn’t necessarily a bad thing. It can actually forge a new and better relationship. And I know this from personal experience. My son, who graduated from college two years ago, recently moved back home to save some money while he pursues his professional dream. My husband and I are happy to help him reach his goal (up to a point). And it’s also fun to have him around again.

There are a few important issues at play. First, you want to help your child. But at the same time you don’t want to squelch his or her drive or sense of independence. And third, but extremely important, you shouldn’t risk your own financial security.

That said, different families have different attitudes about kids moving back home and how much independence they want to encourage. So there’s no one way to go about it. But I’d advise any parents facing this situation to think it through carefully and examine their feelings. They should then have a heart-to-heart with their young adult before he or she moves back home. That way everyone knows what to expect in advance. Here are some things to think about and discuss.

Establish Some House Rules

Living together again is a two-way street, so the first thing to discuss is how you’ll share the house—and household responsibilities. For instance, most parents don’t want to take care of their adult child like they did when they were younger. On the flip side, as an adult, your child shouldn’t be expected to follow the same rules he or she followed as a teenager. To avoid any potential discord, be sure to talk about personal space, meals, having friends over (including boyfriends and girlfriends), curfews, and sharing chores.

You might even put some general rules on paper and agree to them up front so there’s no misunderstanding. It really comes down to mutual respect for each other’s lifestyles.

Don’t Shy Away from Talking About Money

When a young adult decides to come back home for a while, it’s often about money. Sometimes it’s about looking for a new job. Sometimes it’s just a necessary breather to get out of debt or build some savings. Whatever the situation, though, having your child back home raises some money issues for you, too. For instance, household expenses are going to go up. Will your child contribute? Will you charge rent? And what about personal expenses such as transportation, cellphone, and entertainment? Who’s going to foot the bill for these things?

Even if your child’s resources are limited, you might still expect her to pick up groceries or put gas in the car once in a while. It will make you both feel better about the arrangement.

Caution: When it comes to money, think twice about helping to pay off debt, allowing the use of your credit card, or cosigning for a major purchase. Your kids need to learn how to manage these things themselves—and you need to protect your own financial situation.

Also think about finances in the future. Presuming your child wants to live independently again, she’ll need money for a rental deposit, emergency fund, etc. How will she fund this next step? Even if she’s just working part-time until she finds a better job, encourage her to sock away some cash for her eventual move.

Smart Move: Encourage your kids to save. I’ve known families whose kids have come home and who agree to waive rent with the proviso that the money goes into a savings account instead.

Be Frank About Your Expectations for Moving Forward

Depending on the reason your young adult is living at home, you may want to set some expectations for next steps. For instance, if your child’s goal is a new job, make it clear that you expect her to take concrete action to get one. Periodically check on her progress. You might help with decisions about whom to contact, updating a resume, following up on leads—but be very clear that it’s her responsibility to keep up an active search.

Likewise, if getting out of debt or building savings is the goal, suggest that you get a regular financial update. You might help in setting up a payment or savings plan and offer advice on how you’ve handled this yourself.

Smart Move: Consider setting a realistic move-out goal. Whether it’s six months or a year or more, having a time limit will help your young adult realize that the clock is ticking and he or she will have to make a change, no matter how comfortable it is at home.

Encourage—and Help with—Financial Independence

So many families hesitate to talk about finances, but as your child shares your space as an adult, share some of your financial wisdom as well. Talk to her about how you budget, set goals, save for retirement, manage debt, and invest—all the things that help build a secure financial foundation. By doing so, you’ll not only be giving her support in the present; you’ll also be setting her up for future financial success.

Fact: According to a study from the Pew Research Center in 2013, about 48 percent of adults ages 40–­59 provided financial support to grown children in 2012, up from 42 percent in 2005.

Making Financial Independence a Little Easier

Learning to be independent is one of the most important skills you can help your kids develop. Whether your child is leaving home for the first time, or needs a little brushup on the basics, this checklist is a good financial road map to independence.

  • Make a budget. This is crucial to smart financial management and being on one’s own. A budget should cover essentials like rent, loans, groceries, utilities, insurance, car costs, clothing, entertainment, and travel. And of course, don’t forget savings! An online monthly budget planner like the one on schwabmoneywise.com makes this easy to do.
  • Set up an emergency fund. Emphasize the importance of saving and setting aside enough cash to cover at least three months’ rent and basic living expenses. It’s an important cushion to have—just in case.
  • Pay off debt. Pay student loans and credit card balances on time. Being prompt with loan payments not only helps one’s credit rating; it also imposes financial discipline. When it comes to a credit card, paying the balance in full every month will actually save money that would otherwise be spent on finance charges or late fees.
  • Open key financial accounts. If your young adult doesn’t already have them, now’s the time to establish checking and savings accounts, and an IRA (particularly a Roth IRA), if he or she has earned income. See Question 4 on the types of retirement accounts.
  • Continue—or begin—to save money. Remember, time is a young person’s biggest asset. Even saving a small amount each month adds up and helps develop a discipline that can pay big rewards in the long term.
  • Don’t forget about insurance. Shop around for affordable health, auto, and renter’s insurance policies. Health and auto insurance are must-haves at any age. (On a positive note, your child can stay on your health insurance policy until he or she turns 26; you can decide if you want him or her to pay for the coverage.)

Part VI: The People in My Life, Question 44

Additional excerpts

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