How to Stop Paying Your Adult Kid’s Way

Only one in three adults ages 18-32 runs his own household, according to the latest Pew analysis of Census data. Yes, that’s right—a whopping 34 percent of people in this age group (known as “millennials”) live with their parents, a number which has risen since the Great Recession of 2009. Lower employment and marriage rates and higher college enrollment drive the trend. But now the economy’s on the mend, leaving an increasing number of parents facing this dilemma: How do you stop paying for your adult kid’s way without kicking him out in the streets?

Teenager relaxing

Bring up Budgeting

Talk about how your child’s living expenses factor into family finances; this can provide the initial push down the road to financial independence. Millennial financial planning expert Beth Kobliner recommends using a free budgetary tool with a pie chart display, such as that available from Mint.com, to show how your child’s expenses impact family budgeting.

New Year’s financial resolutions, tax time, college graduation and job transitions provide opportunities to broach this discussion. You might use the same occasion to review basic budgeting strategies, such as how much of your child’s monthly income should be devoted to expenses and saving.

Charge Rent

Charge your child rent; it’s a key step to promoting financial independence. Child behavioral therapist James Lehman recommends you establish a living agreement which includes rent for each and every situation after the child has turned 18. If the family needs money, the rent is his contribution. If you don’t need the extra income, you can put the rent money in a savings fund to help your child pay for an apartment.

Save Up

To make your millennial’s move feasible, he needs to save money. Financial coach Jeffrey Gitterman suggests you review your child’s projected expenses with him. Help him determine what he can realistically afford for an apartment, and plan his monthly budget accordingly.

For some millennials, student loan or credit card debt might slow down saving. In this case, encourage your child to explore ways to reduce his monthly debt:

  • He may be able to defer his student loan repayments
  • If his credit is good, he may qualify to consolidate his credit card bills
  • If he receives regular payments from a structured settlement, he may be able to sell his future payments to a company like J.G. Wentworth for a lump sum of cash he can use to help pay off his debt sooner

Point Toward Career Advancement Resources

Another barrier hindering your child from moving out can be insufficient income. The average age where adults reach a median income representing financial independence has risen from 26 to 30 since 1980, a 2013 Georgetown University Center on Education and the Workforce study found. Point your child toward career guidance resources, such as the Department of Labor’s O*NET OnLine. It can help advance his career and accelerate his move toward financial independence.

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1 Comment

  1. Thanks for posting this informative article, it's the advice I need when dealing with my grown-up kids who are working. Though they are working now doesn't guarantee they know how to handle finances properly. Still they get excited every payday but end up being broke 3 days before the next 🙁 I've been telling them to set aside 10% for tithing, save 10% in a separate account, and reward self 10% just as I do. I hope they get the message, and now here I have good advice to follow. Cheers!

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