The most popular graduation gift this year? According to the consulting firm Twentysomething Inc., it’s a place to sleep, with 85 percent of new grads moving back home with mom and dad. The tough job market, as well as the fact that young people tend to be close to their parents, contribute to that trend. (Just five years ago, fewer than 60 percent of 18-to-24-year-olds lived at home, according to the Network on Transitions to Adulthood.)
[In Pictures: 10 Smart Ways to Improve Your Budget.]
But the return to multi-generational living doesn’t always go smoothly, especially when adult children outstay their welcome. Here’s what parents can do to make sure their graduation gift doesn’t end up costing more than they thought.
1. Budget for the financial support you plan to provide. Sure, offering grads their old bedrooms seems free, but it often ends up costing parents more than they realized. Grocery bills, utilities, and even car costs all tend to go up when adult children return home. Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial suggests helping grads with essentials like auto or health insurance for a limited time. Then, after they land a job, they should take over those payments. In fact, she recommends charging rent to help them learn how to budget and manage their living expenses. That money, she adds, can be set aside to put towards a security deposit or downpayment once they move out. (See Don't Let Your Kids Ruin Your Retirement Fund)
2. Give more advice and less financial support. Job-hunting tips, encouragement, and general emotional support are all invaluable to 20-somethings trying to find their footing. Barbara Ray, coauthor of Not Quite Adults, suggests, "This is a difficult and confusing time. Try to remember what it was like when you were going through it." Parental support can provide a safety net that keeps grads from feeling like they have to jump at the first job offer they receive.
3. Make a plan together. Talking openly about how long adult children plan to live at home and whether they should pay rent or handle certain chores can help prevent tension from building. De Baca suggests that parents ask themselves these questions: How long are your children welcome to stay? Will they be required to pay rent or chip in for groceries? In what other ways do you expect them to contribute to the household? She adds that putting those expectations in writing can also make for a smoother transition.
4. Check in with each other regularly. Everyone likes to feel like they’re making progress towards their end goal, whether it’s landing a full time job and renting an apartment or paying off student loans. De Baca suggests that parents help their children create a budget to start saving and moving towards financial independence. Of course, setting a good example yourself is always a good idea, too.
Parents, how are you helping your new grads get started in their new lives?
Kimberly Palmer (@alphaconsumer) is the author of the new book Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back.