Better shelve those plans to turn your teenager's bedroom into a home gym when he leaves home - many young people are staying in the family abode well into their adult years. So what are the financial implications for you? MPP takes a look.

A long-term view
Once upon a time, teenagers couldn’t wait to finish high school so they could fly the family nest and secure their independence. But today’s kids are smarter.
They’re staying at home because it’s cheaper and easier – no rent, three meals a day and someone to do the washing. No wonder they don’t want to go. But the trend has implications on what parents do with the family home and their own plans for the future. If your adult kids are still at home, find out what their plans are – such as how long they expect to stay with you and where they’ll go when they leave. This will help you formulate your own plans.

To charge or not to charge?
If it appears your young adult is here to stay, and he or she is earning an income, you might be wondering if it’s appropriate to charge rent or board. The answer is a definite yes.



A costly lesson
Generating income is not the primary reason for charging your children board or rent to live with you, although covering costs is a consideration. It is important for your son or daughter to contribute to the household so they understand the costs associated with living on their own and how to manage a household income, with expenses such as utilities, food and of course, rent or a mortgage. This ‘education’ will help prepare your young adult for the harsh realities of the real world. Not charging them isn’t kind or caring, it’s allowing them to miss out on a valuable life lesson.

Budgeting 101
Spend some time with your children and teach them how to budget, factoring in costs such as rent, food, fuel, car loans, mobile phone bills and credit card payments. If they learn how to put money aside for fixed expenses and can save on top of that, they are learning to work out their own finances. This could help them learn to save for a home loan – they’ll be out of your hair (and your lounge room) sooner!

How much?
Unfortunately there is no rule of thumb for setting the rent for your young adult. Some parents charge a set percentage of their income (from 10 to 35 per cent), some simply apply a set amount, such as $100 a week, which usually covers food and board (and, of course, the odd load of washing). In general, financial planners advise that housing expenses should not total more than 30 to 35 per cent of an annual income. While it may seem steep, charging them 30 per cent could teach them a strong financial lesson. Consult your financial planner or accountant. 

Communication is key
As soon as your child is earning an adequate income and doesn’t have plans to move out anytime soon, it’s time to talk. Ground rules are essential. Agree upfront about things such as rent (the amount, frequency of payment and implications if it isn’t paid on time), your expectations about what chores they will undertake around the house, how long they plan to stay at home, what time they are expected home, and rules about friends and visitors.

A kiddie contract?
Unfortunately, some kids view their parents as an endless pit of money. You need to explain to them what it costs you to run your household and how their contribution will ease the pressure. This will give them a sense of purpose. However, be clear that charging rent is not a ploy to get him or her to move out. Some parents go so far as to draw up a contract– this could ensure that your child views the deal in a more serious manner.

To spend or save?
What you do with this additional income is completely up to you. You could use it to pay your bills or put it aside for when your son or daughter is older, perhaps to help them out with the deposit on their first home. You may even decide to invest the money in your own retirement – it’s your right to do so. Or you could even treat yourself every now and again.

They’ll be back
If you do manage to encourage your ‘little one’ to move out, chances are they’ll be back at some stage. If they do, you have a boomerang kid on your hands! More than 45 per cent of people who leave home for the first time return for an average length of between one and two years, and 70 per cent will be back within three years of moving out. But nearly all of them, 94 per cent, are out of home by the time they reach 28, so there is a light at the end of the parenting tunnel.