In recent years, soaring rents and house prices have made it more difficult for young adults to live independently.
Indeed, the Office for National Statistics report that the total number of adult children living with their parents increased by 14.7%, from around 4.2 million to 4.9 million, between 2011 and 2021.
Additionally, the Guardian reports that 1 in 3 students starting university in 2023 may opt to live at home – up from around 1 in 5 before the pandemic. Researchers say that many of these said they could not afford to live away from home.
All these factors mean that it’s more likely than ever that your adult children or grandchildren will either remain at home or return to the family home. Read on to find out how your financial plan may need to adapt to this changing landscape.
Charging rent and board
One of the earliest conversations you’ll need to have with your child will concern your expectations for them “paying their way” while they live with you.
It’s likely that you’ll want them to contribute towards the household expenses – particularly if they are working. However, one of the reasons they may have moved back home is to save up a deposit to buy a property of their own, so there is a balance to strike here.
A recent study reported by IFA Magazine found that more than half (55.1%) of parents charge their adult children some form of rent money for living at home, with an average charge of £25.55 a week (£110.71 a month).
Your expenditure will likely rise from having another adult in the home – from your utility bills to your grocery shop – and so you should set some early expectations of how much you want your son or daughter to contribute.
In fact, the study revealed that 57.1% of parents say their main motivation for charging rent is to get help with household bills. Of these bills, food bills are the most important factor, followed by energy bills.
Set some boundaries
As well as establishing some financial rules, you’ll also need to set some expectations, boundaries or “house rules”.
- What’s the timescale for your child moving out? Try and have a plan for when they will move out – this might include setting savings goals or you helping them to budget more effectively.
- What responsibilities will they have? Even if they pay rent, you may still expect them to do certain jobs or tasks around the house. Agreeing these early can help to avoid resentment later.
- What are the rules around privacy and boundaries? While it may be easy to ground your child as a teenager, this is harder as an adult! Make sure you all understand what is and isn’t acceptable when it comes to their personal life.
These issues can be tricky to navigate, so it’s also important to discuss upfront how you’ll handle disagreements. Reverting to “parent/child” roles is likely to result in potentially serious fractures in your relationship, so discussing how you will resolve problems could strengthen your bond now and in the future.
Think about your own financial plan
While welcoming a child back home might help them get on their feet financially, it’s important to consider how this could affect your own plans.
Aldermore report that 1 in 3 parents (29%) have dipped into their own long-term savings pot to provide financial support for their now grown-up children.
While it’s natural to want to help your loved ones, you need to make sure that it’s not damaging your progress towards your own goals.
For example, has the assistance come out of your emergency fund? If so, you might need to top up your rainy day fund, ensuring that you have between three and six months’ expenditure saved in an easy access account.
You also need to consider whether you’re able to maintain your regular pension and savings contributions if your expenses have risen or you’re diverting money to help an adult child.
If you have redirected some of your savings, your retirement fund may not be growing as quickly as you need it to for the lifestyle you want later on. This may mean you have to work for longer or make compromises in your own future.
Working with a financial planner can add value here.
We use sophisticated cashflow modelling and so we can forecast how any support you give to an adult child now could affect your longer-term plans. For example, if you want to make a gift towards the deposit for their first home, we can see how this will affect your own financial position in the future.
This can give you the confidence to help out your child (or grandchild), safe in the knowledge that you can still achieve your future financial goals.
Get in touch
If you have an adult child living with you, we can help you devise a plan to support them while staying on track for your own goals.
Contact us by email at email@example.com or call us on 01189 876655.
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate cashflow planning.