Stephen B. Morton/Atlanta Journal-Constitution via AP
Stephen B. Morton/Atlanta Journal-Constitution via AP

The financial strain when adult children move back in

By Staff Reporter Time of article published Apr 6, 2020

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The looming economic crunch in the wake of the Covid19 crisis will no doubt see many adult children, some with families of their own, moving back in with their parents - but they should take care not to overwhelm their parents or put them at financial risk.

That’s the advice of Gerhard Kotzé, MD of the RealNet estate agency group, who says there are many reasons that young adults might need to move back into their parental homes, including divorce and illness as well as unemployment, retrenchment and business failure, and that it would be a very hard-hearted parent who would turn away their own child in such circumstances.

“But this will most likely mean that they have to change or postpone their own plans to sell the family home and downsize, relocate or retire, and it could also put their own finances under strain – so they need to be straightforward about their expectations and limits right at the start of this new living arrangement.”

Firstly, he says, they should be careful that the family does not revert to the old pattern, dating back to when the children were still young, of the parents being totally responsible for all work and bill payments. “Even if their returning adult children are unable at this stage to make a financial contribution to the household, they should be willing to do other things to keep things running smoothly, and perhaps help their parents to cut down on expenses.

“They could, for example, take over tasks for which their parents might usually pay outside providers, like cleaning, maintenance and gardening. Grandchildren can be expected to help out too, by taking on some household chores. In addition, everyone in the family needs to understand that the budget currently only stretches to necessities and that they all have to live carefully.”

Secondly, says Kotzé, parents should vigorously resist any pressure or inclination to dip into their retirement funds to get their adult children out of debt. “At their age they will find it difficult to recoup any capital sum and even if their children do later find employment they, in turn, will find it difficult to reimburse their parents because they will need their earnings to set themselves up again.

“It’s enough for parents to give their adult children and any grandchildren a home and provide support while the children sort out their own debt positions and repayment arrangements.”

Third, the family should honestly discuss personal boundaries and “house rules”, he says. “It makes matters easier if the property can accommodate different parts of an extended family in clearly demarcated areas to allow everyone some private space. But even if that is not the case, relationships can be kept cordial by openly discussing needs and expectations and reaching any compromise necessary up-front.

“And lastly, it should be agreed that parents will remain ‘in charge’ in their home. This is especially important where grandchildren are involved since they may instinctively look to their parents to make all the decisions. The situation should be carefully and kindly explained to them so that they are not confused or upset by their new situation.”

PERSONAL FINANCE 

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