Cabin with family

Financial respect: Young folks at home

Young adults living at the parental home after college (or grad school) have become very common phenomena. For some reason, every media piece on the subject (or the social media comments afterwards) either has a derisive tone toward slacker kids and their pushover parents, or a resentful tone by the parents who feel they’re being exploited.

How to avoid that? Since an awful lot of the problem comes down to money and who pays, I’d like to suggest some guidelines on how this really could work to everyone’s advantage. After all, two (or three or more) can live more cheaply than 1 (+1+1).

I’m all for parents having respect for their offspring, and young adults having respect for themselves and parents. But all respect needs to be earned. So, if the young adult is going to live at the parents’ home, I think there should be some principles adhered to.

  1. Everybody has a job.

Part A: Everybody has a job or some source of income. For parents, this can be earnings or pension or whatever. For the young adult, this means some sort of job—even if you’re still searching for the career position, or are in grad school, you need some sort of pick-up job earning some cash. No exceptions unless you’ve accumulated savings from a previous job.

Part B: Everybody has household tasks equivalent to at least the minimum expected of a roommate. That means, for example, the young adult does their own laundry, cooks at least some meals, cleans a bathroom, vacuums/dusts some of the time, washes floors, mows the lawn, makes repairs, and keeps their own room clean enough not to draw bugs or vermin. This is reasonable for any roommate and core competencies for adults.  I will personally never understand how anyone not disabled needs a lawn service or housecleaner when teenage children (or older) are living in the house.

Part C: If the young person doesn’t earn enough money to pay their reasonable share (see below), they need to take on regular significant jobs that would need to be paid for—power washing the house, painting the house indoors or out, cleaning out the basement, you get the idea. This needs to be regular, scheduled, and not credited until completed. Get some estimates if you don’t know what it would be worth.

  1. No one comments on anyone’s sexual behavior unless it is visibly embarrassing to others. IMHO, parents have no business commenting or restricting the dating lives of anyone else in the house who’s an adult. An adult who wants to stay out all night should arrive home in time in the morning to let out the dog. If people would have safety concerns about a missing person, the people at home deserve a brief call notifying them that someone will not be home that night. Families should agree on the overnight guest policy. This may be the biggest source of friction between parents and adult children. Discretion is the watchword here.
  1. People are entitled to set drug and alcohol rules in a home, just as roommates would agree on the policies. If you make a vomitrocious mess, you clean it up.
  1. Anytime the young person feels they don’t like the rules, methods, or costs, they are free to move out with no resentment or subtle feelings of abandonment.
  1. No one does the saving for anyone else. I hear a lot of parents tell me they’re saving the (paltry) $300 or $500 for the kid’s wedding or first down payment. Um, no. The kid is costing you money and furthermore should be choosing, saving for, and accomplishing their own goals. It’s that pesky respect again. With the deal they’re getting, they ought to be able to save a lot more.
  1. Young adults pay their fair share. To parents: respect your children enough to believe they can pay their way. Millennials: don’t be a sinkhole to your parents. He or she who pays the bills, makes the rules. I constantly hear parents tell me they don’t charge their kids anything, or what they charge is minimal. They usually smirk after this, or tell me they’re waiting breathlessly until the kid moves out. Charge your kids what they cost; pay your way.

How to calculate what a young adult should pay:

Here’s the method I used. Look at 3 years’ worth of expenses and average them (okay, one year if you’re not an obsessive bookkeeper, but adjust each year). Figure out all costs in which the kid participates:

  • Housing including property taxes, homeowner’s fees, and insurance. Wear and tear is hard to quantify.
  • Utilities
  • Internet, cable, and landline service
  • Cell phone (I think this should be the whole bill, not just what an extra phone costs)
  • Shared car cost—payment, insurance, gas, maintenance
  • Food (including booze if freely available and grilling charcoal if used)
  • Veterinary bills for shared pets
  • Gardening
  • Average home repairs (1% per year of home value if you need a rule of thumb)
  • Health insurance if on a family plan
  • Whatever else you can think of

Paid for by the individual incurring the cost:

  • Health care deductibles and prescriptions
  • Health club and any other club dues
  • Lessons, musical instruments owned by the individual, and cost of hobbies
  • Entertainment and eating out
  • Gifts
  • Charitable donations
  • Clothing, grooming, makeup etc.
  • Individual car and all costs associated
  • Craft supplies
  • Debts (including student loans)
  • Savings (retirement, goals)
  • Vacations (their share if taken as a family)

So, add up everything in the first set and divide by the number of people in the household, then divide by 12. That’s the reasonable living cost the young person should be paying. In our case, I also have a home office where I take business deductions, so I arbitrarily allocated 1/3 of those deductible bills to my roommate. You have my permission to modify these—for example, it’s my car so she doesn’t cover the payment, but if she damages it, she’s 100% responsible for repairs. Sure, the fewer the people in the house, the more individual cost, but also the more space, access to laundry facilities, etc.

These are all reasonable costs associated with living a life. If you can’t pay for them, you can’t afford the choices you’re making. That’s basic budgeting—and by the way, if you as a parent don’t have sufficient savings for emergencies and retirement, you can’t afford to bankroll the kids. Same goes for grandchildren gifts, free child care, and huge lump sum transfers.

In our case, that came out to about $1,200/month and in trying not to be the meanest mom in the world, I knocked it down to $1,000 so she could pay extra on student loans, but half the vet bills. I’m not sure she’s coming out “ahead” on that.

When I tell other people what I charge, they’re invariably shocked. So much! But not really—there’s nowhere in Evanston or the Chicago area that you could have all these services, rent, and food for that price. Yet, since we both know that’s what it costs, she is indeed paying her way and can have respect for herself. I don’t feel resentful either. And I most definitely see her as a responsible adult. It’s win/win.

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