The best way to grow up may be to stand on your own two financial feet.
In 2022, a record number of young adults between the ages of 18 and 29, lived with their parents. That's the highest level since 1940. These so-called "boomerang kids" are either staying at home or are back home for a variety of reasons.
According to the financial planning company Prudential, some are staying with mom and dad so they can save up to buy a home. Others want to pursue higher education or simply enter the job market later.
"Many parents will do whatever it takes to make sure their kids land on their feet and are ready to take on the world around them, and that includes financially supporting young adults 'boomeranging' back home," said Susan Somersille Johnson, Prudential's chief marketing officer. "For many families, this can dramatically change retirement plans."
If your household includes adult children, you may wonder how much you should expect of them. Should you charge them rent? Here's what one financial expert has to say.
It's a hard yes
Ex-Wall Street trader and internet superstar Vivian Tu goes by the handle YourRichBFF. Tu dispenses financial advice via her website and through many social media channels. When addressing the issue of adult children paying rent to live with their parents, Tu leaves no question as to where she stands on the subject: Parents should be charging rent. Tu's reasoning is as follows:
- Young adults living at home have more discretionary income that is not being spent responsibly. Tu points to the fact that these young adults are driving a luxury spending boom. According to financial services company Morgan Stanley, the record number of adults living at home is helping drive the boom for luxury goods in the U.S. and UK.
- Of those luxury goods Tu said, "While some pieces are investments, most will go down in value. And it's not fair to throw your money into a pit while someone else is covering your necessities."
- Having an adult child at home makes it tougher for parents who count on a pension, 401(k), or savings to get by. After all, they're adding to their parents' utility and grocery bills.
- Adult children should pay rent, even if their parents don't need the money. She suggests that financially secure parents collect rent and put it away in a savings account for their child. "Ideally, this will get your kiddo out of the nest, on their own two feet, and paying their own rent sooner rather than later," Tu said.
Tu is not alone
Tu is not the only financial guru to suggest that adult children living at home pay rent. According to SmartCapitalMind, financial experts agree that parents should charge rent to adult children living at home or in another property the parents own. Financial advisors have seen cases in which young adults don't learn to take the obligation of paying rent seriously and end up deeply in debt.
Young adults who understand that rent and fixed living expenses must be a priority are less likely to fall short on housing payments later on.
Psychologist Dr. Henry Cloud once said, "To rescue people from the natural consequences of their behavior is to render them powerless."
If what Dr. Cloud said is true, perhaps the kindest thing you can do for your adult child is to allow them to pay rent.
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FAQs
According to SmartCapitalMind, financial experts agree that parents should charge rent to adult children living at home or in another property the parents own. Financial advisors have seen cases in which young adults don't learn to take the obligation of paying rent seriously and end up deeply in debt.
How much should you charge your adult child rent? ›
Some parents choose to charge a nominal amount, such as $50 or $100 per month, while others charge a percentage of their child's income or a flat rate that covers a portion of their expenses.
Why are more parents charging their adult children rent? ›
When parents were asked in the Carrick on Money survey why they chose to charge rent, the main reason was to help their children budget for fixed expenses. Some parents said they are saving the money to give it back to their kids, and others said their financial situation requires their children's help with costs.
Should I help my adult son financially? ›
It's important to make clear to your adult kids that it's their responsibility and in their best long-term interests to earn their own way. Stress that any financial assistance you provide to them should be viewed as a bridge to their eventual financial independence — and not a handout.
Can your parents make you pay rent? ›
Answer: Yes, parents may charge their child rent for living premises before the child eighteen years old.
Is it OK to charge your adult children rent? ›
According to SmartCapitalMind, financial experts agree that parents should charge rent to adult children living at home or in another property the parents own. Financial advisors have seen cases in which young adults don't learn to take the obligation of paying rent seriously and end up deeply in debt.
Should I charge my 25 year old son rent? ›
Adults — even when they're your children — must develop a basic sense of financial responsibility, and it's your job to help them learn: Charge your adult children rent.
Should you charge your 19 year old rent? ›
If your child is living in your home, you want to encourage them to act like a responsible adult, and at the same time set them up for independent living. Depending on your circ*mstances, you may want to charge your adult child rent for living at home with you.
Why do American parents charge their kids rent? ›
"This is our way of preparing her and making sure she knows that things aren't free," Cody told Newsweek. "Part of becoming an adult is knowing that you have to either pay rent or you'll have a house payment. Our hope is that by doing all this, we're preparing her for the world."
How much should adult children pay to live at home? ›
Most of the parents of high school graduates living at home we surveyed told us that they are charging their kids rent to prepare them for the real world. Twenty seemed to be the average age when they started charging rent, and the average rent seemed to be about $100 a week.
The time to stop is when the adult kids aren't putting in proper effort to better themselves or their situation. Too many parents start helping and their adult kids continue to make bad decisions which contribute to them needing help.
How to stop financially supporting your adult child? ›
Create a Plan and Communicate It
Swantner recommends creating a firm plan that gradually reduces the child's financial dependence. You might, for example, stop paying the cell phone bill this month, the grocery bill next month, and then let your child know that in six months, she's responsible for her own rent.
Are parents responsible for adult children's debt? ›
No, parents are not generally responsible for an adult child's medical debts, said Richard Gundling, senior vice president at the Healthcare Financial Management Association, an organization for finance professionals in health care.
Should I pay rent if I live with my parents? ›
Most Americans Disagree. A majority of people in the U.S. believe that adults in their twenties living in their parents' home should pay rent, even if the parents do not need the money. That is according to an exclusive poll conducted on behalf of Newsweek.
Can you claim rent on your taxes if you live with your parents? ›
If you live in a house owned by your parents, on the title of which your name does not appear, then you are not staying in a place owned by you. Therefore you can show that you are paying rent, in this case your parents. Whether you stay with them or not is immaterial.
Can your parents take your money at 18? ›
Bank account ownership: If the bank account is solely in your name, your parents should not have access to it. However, if it's a joint account with your parents, they may have the right to withdraw funds.
Should I charge my 20 year old daughter rent? ›
If you already have enough money, you might feel that being your children's financial support pillar is the right thing to do. However, all adults eventually need to be responsible for their own living costs. You can't stop that from happening, but you can help prepare your children for it by getting them to pay rent.
Should I charge my 19 year old son rent? ›
If your child is living in your home, you want to encourage them to act like a responsible adult, and at the same time set them up for independent living. Depending on your circ*mstances, you may want to charge your adult child rent for living at home with you.
How much does it cost to support an adult? ›
A new report from savings.com found that parents are spending an average of $16,608 per year to financially support their adult children.
What happens if my 30 year old son won't move out? ›
Many states require you to serve a “Notice to Quit” to any adult living in your home. If your adult child still refuses to leave, you may need to follow up with an eviction notice that gives a deadline for him to move out, typically thirty days.
