Family money: Susan Hely

Adult children who still live at home are a growing challenge for parents

When should adult children move out of home? This is a question that parents often grapple with.

There are many reasons why adult kids are living at home longer today than any other generation did. Even before Covid-19 “boomerang” adult kids were returning to the family home, but now the trend has sharply increased.

Around 57% of men and 54% of women aged 18 to 29 lived with one or both parents in 2017, up from 47% and 36% in 2001, according to the long-running Housing Income and Labour Dynamics (HILDA) survey that tracks 17,500 people in 9500 households over almost 20 years.

“Of course, the cost of housing is a big factor, and it’s been rising faster than inflation and incomes,” says Roger Wilkins, deputy director of research, and Esperanza Vera-Toscano, senior research fellow at the University of Melbourne, as mentioned on The Conversation.

The other setback for adult kids is that it is getting harder to secure full-time, ongoing secure jobs, and part-time work is more common, say Wilkins and Vera-Toscano. Young people tend to work in sectors where jobs have been wiped out, including travel, retail and hospitality.

With so much uncertainty around jobs and the economy, not surprisingly, adult kids are reluctant to move out for the first time or to return to the rental market.

While many cultures embrace multigenerational living in the one home, others want their kids to be self-sufficient.

I know plenty of compassionate parents whose children show no sign of leaving the nest, long after they finished their tertiary study. They say that their working kids are saving for a home deposit by living at home. But the problem is that house prices are so expensive that the deposit can take years to accumulate. The years can slip by and the kids are still living at the family home, often cocooned from the real world and its financial challenges.

Kids often assume their parents are well off, but this isn’t always the case. The cost of raising kids is relentless, extending well into their mid-20s. Parents have to consider their own needs, such as retirement savings. Do you really think your kids are going to support you in your old age?

When I moved out of home I rented a rundown inner-city house with others. The bathroom didn’t have a door and there were cracks everywhere, and we set it up with old furniture. But finding a cheap house these days is hard. Many have been renovated and rents are correspondingly high. We kept our costs low, belonging to a food co-operative to buy in bulk. We didn’t eat out, let alone buy takeaway coffee. It was a financial wake-up call for me. I had a miserable job in a rough bar.

Moving out isn’t always a joyful experience. A shared house can be tricky, sometimes diabolical. Leases can be difficult to escape. But if your kids have a bad experience, they work out pretty quickly what makes a good flatmate.

If your kids are working and living at home, you want them to be saving hard. Otherwise they may become addicted to their higher disposable income. Some of my friends’ kids earning good salaries have great wardrobes and take expensive holidays but aren’t saving.

Paying rent is a worthwhile habit for them to get into. One canny friend asked her son for rent that was about half a commercial rent. Unbeknown to him, she saved it in a separate account and handed it over when he and his wife were buying a home.

Some parents who have money to spare and are eager to launch their kids contribute to their rent so they can get them out of the house. But you have to think it through. When will you turn off the tap? I know parents who are helping out adult kids well into their 30s.

The Bank of Mum and Dad (BOMAD) helps kids buy a home by either going guarantor on the deposit or lending or gifting them some money as an advance on an inheritance. But it has taken a bit of a hit as parents worry about the effect of volatile markets on their own finances.

I do recommend being fair to all your children. If you help one child, let the other kids know and tell them that you will adjust any payments to them in your will. If you give to a child for certain life milestones, such as marriage or grandchildren, be aware of any feelings of anger and resentment in siblings who don’t marry or can’t have children.