When Your Adult Children Are Still Living In Your Financial Nest

Mother and Daughter smilingBy Manisha Thakor

A recent Pew Research report highlights a growing trend: in these tough economic times, an unprecedented number of adult children are receiving financial help from their parents. According to the report nearly half of adults ages 40 to 59 have provided financial support to their adult children in the past year. Put differently, Pew Research indicates nearly 40% of all Americans between the ages of 18-34 currently live at home with their parents or moved back temporarily in recent years.

With the average graduate’s loan debt at an eye-popping $27,253 , a big reason kids are moving back home is because of rising education costs. With double-digit rates of unemployment among Americans ages 18 to 24, the poor job market is also a contributor.

One other factor at play – that is slightly easier to control but much less discussed – is the lack of financial education for the younger generation. Fewer than half of the 50 states make high school students take an economics class, and just 13 states require a personal finance class as a prerequisite for high school graduation, according to a 2011 survey by the Council for Economic Education. That may mean you will have to fill the education gap with your adult children.
Here are some tips to help your children learn how to fly out of the financial nest on their own wings.

  1. Set clear ground rules. Whether it’s a contribution to family groceries or a percentage of the utilities bill, be clear from the get-go what kind of financial contribution you expect, if any. If your child is earning money from a part time or freelance job, have him or her agree to set aside a specific amount each week or month into their own “get-out-of-the-nest” savings fund so they are not squandering the money they are earning on frivolous purchases.
  2. Put monthly “financial touch base” appointments on the calendar. In today’s job market, it can take quite some time after graduation to get a job. Regular check-ins on the progress your child is making at establishing independence, and checking in to see if household financial arrangements need to be adjusted, can help keep misunderstandings to a minimum.
  3. Don’t be afraid to say no. It’s natural as a parent to want the absolute best for your children and to spare them any pain. But sometimes the best thing you can do is help your kids learn to make their own way. If financially assisting your kids is going to hurt your own retirement, you will be doing both of you a favor by speaking honestly about that. Your kids love you and don’t want you to suffer either, or become a burden to them later in life!
  4. Be mindful how you speak about money. Even your adult children are like sponges. When they hear you respecting money by using words that convey an awareness of the hard work that goes into earning your paycheck while also making conscious spending decisions, it's a subconscious lesson that they take to heart.
  5. Equate time and money. Suppose your adult child can earn $10 an hour doing part time or freelance work. And say they’d like to buy something that cost $300. Encourage them to do the math to see how many hours they would have to work to earn that item, taking into account the effect of taxes and other deductions on take-home pay. Now they have a tool to see how “badly” they want it. Reinforcing the link between hours worked and money spent is a very powerful motivator – both to spend more mindfully AND to keep looking for better-paying work.

This kind of open dialogue can be even more awkward at first than the “bird and the bees” chat. However, pushing through the momentary awkwardness can yield big dividends by staving off a source of stress that could put a rift in your relationship. Being bold and brave about the money talk with your adult children puts you on solid footing to truly enjoy each other for years to come. 

Need Financial Help?

Phone ringing Call us 800-842-2888

Phone with arrowSchedule a callback

Circular people graphicAttend a meeting or seminar 

Experiencing a Life Event?

Tools & Calculators

See all 

Financial Essentials
Workshops & Webinars

  • Tomorrow in Focus: Saving for Your Ideal Retirement
  • Money at Work 1: Foundations of Investing

See all 

Your future, your IRA

Learn how a TIAA-CREF IRA can help you save.

Learn more

C11157