I once met a man who was one of the most generous people I knew. He would give away his own food to others who were less fortunate. He ended up giving so much away that he didn’t have enough to eat for himself.
The Parental Nurturing Effect
You may read this and wonder how anyone can give that much away. But it happens all the time financially. Parents have an instinctive drive to provide a safety net regardless of the cost to themselves. A situation where this happens is when adult children (and the associated grandchildren) move back home. An older couple who has a comfortable nest egg, may find that after the child’s family moved back in, they are spending way more than they can afford. To use the airplane analogy, they are putting the oxygen masks on the children before putting it on themselves.
One reason for the excess generosity is the feeling that charging rent or asking for contributions toward utilities is being cold and not “family.” How many people treat children who have moved back in as an “open tab” where the parents cover everything – groceries, streaming services, mobile phones, and car expenses? When the children were young, they needed support and it was given willingly. As adult children, the only requirement to provide support is that gut feeling. Certainly, there must be some middle ground between an “open tab” and being a gruff landlord.
Early Communication Is Key
I think my own parents provided a good example that can help if you find yourself in this situation as older adults. Soon after I finished college, I had to move back in with my parents for a few months.
The first thing my parents did was to have an adult conversation with me. Their perspective was not as a parent who needed to provide for me. They made it clear up-front that we were all adults in this house, and as the owner of the home I was going to live in, my parents had some expectations of me. They agreed not to charge me rent or for utilities. Instead, they placed rules around both the contributions I would be expected to make as well as the level of communication they expected from me on my comings and goings.
The key is to maintain open communication with the children. The initial move-in might have been during a crisis situation, but plan for a time to hold this conversation as soon as the crisis is stabilized. This should be within days or a few weeks of moving back in. Consider the conversation topics ahead of time — what you want to provide as parents, and what is reasonable for the child or children to provide.
The Impact To The Nest Egg Is Not Trivial
When it comes to financial support, remember that every dollar spent on a child’s lifestyle is a dollar that isn’t compounding in funds that will be needed for the parent’s healthcare or retirement fund. If you are still in the earnings years, don’t decrease your savings plan because of this household change. A parent might feel they can spend on the children with the expectation their children would help out when the parents ran out of money. Particularly if the child moved back in due to poor money management practices, it isn’t likely they will have extra money to help mom and dad. After being generous with their own finances, they may find themselves destitute.
Quantify The Financial Cost For Supporting Children
When preparing for the conversation with the child, consider how much more electricity, water and food an extra adult adds to the expenses. Quantify this with real numbers to understand what the child is actually costing you. Set some limits on this extra expense by considering hard stop dates on any expenses you plan to take on so that the total cost is a known rather than unknown.
Remember that decreasing support for a child doesn’t have to be an all-or-nothing proposal. Identify specific expenses to end with a date. This might be something that isn’t costing a lot such as paying for ride-share rides, or mobile phone service.
Finally, when having the actual conversation with the child, shift the conversation from a version of “you owe us money” to a version of “we need to adjust the household budget so that we can maintain our independence as we age.” Silly as it may seem within a family, go ahead and write down the agreements made in the meeting. It does not have to be at the level of Sheldon Cooper’s notarized roommate agreement in The Big Bang Theory. But just the act of putting it on paper gives it some formality, makes it feel more official, and makes it mentally harder to break.
In looking at the reasons for moving back in, it may be because the child has poor money habits and the crisis that causes the move is due to unexpected financial expenses that the child cannot resolve on their own. If this is the case, and you’ve been diligent with your own finances in building a nest egg, you can also take this opportunity to teach the child financial life skills that they may not have learned the first time around. This time, it can be as adults with one another, and not as a parent-child relationship.
It is Possible To Help Some But Not All
The goal is a living arrangement where the parents are a guide to the child. Since they are living at home again, the parents are providing some subsidy, but are not acting as a bank where the child can make indefinite withdrawals. By guiding these skills within the household environment, the children benefit by becoming independent again and the parents benefit by preserving their nest egg.
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