Steve Espisito, a financial analyst for Morgan Stanley, visits ABC7 Chicago to discuss this trend and reasons why.
Advice for parents:
1. Discuss expectations; You need open lines of communication
a. DON'T: assume that you and your child are on the same page.
i. You may think it's understood that the move-in will only be for a few months or that your child will be asked to contribute money and work or search for a job, but unless you lay out these ground rules, the relationship could get tricky.
b. DO: Have an open conversation about it.
i. Moving back in can be emotionally tough for grown children, so be honest with them about your expectations and ask what their expectations are too.
2. Set House Rules
a. When children move back in after years (or even a few months) of independence, they may be accustomed to living their own lifestyle.
b. In order to coexist in the same house, it's important for parents to respect their children's privacy and choices, while also setting basic house rules. This can include establishing household responsibilities, car usage (if sharing a car), and hours when higher noise levels are unacceptable.
3. Discuss an exit strategy
a. This may mean allowing your child to stay with you until they find a job—as the report notes that unemployed millenials are more likely to live at home—but make clear that it cannot be an indefinite search
b. Time limits can also help. The majority of millenials living at home are 25 years old or younger, so letting your child know that this is not uncommon, but also cannot drag on for years, can be helpful
4. Do not put your own financial security at risk
a. The Wall Street Journal reports that having a child move back home can cost between $8,000 a year to $18,000, so only take on this responsibility if your finances can handle it (online.wsj.com/article/SB10001424127887323699704578326583020869940.html)
b. The same WSJ report notes that "A 2011 study by the National Endowment for Financial Education found that 26 percent of parents with adult-age kids living at home have taken on debt in the process, either to help their child with a loan or for their own spending needs. Thirteen percent delayed a life event like buying a house, and 7% delayed retirement."
c. A good option would be to make the child pay (a potentially reduced) rent and chip in for a percentage of food and home maintenance costs.
i. This can reduce the financial burden on parents while encouraging the child to continue looking for somewhere else to live.
d. Another option might be to have them focus on paying down student loans, potentially under an agreement in which they pay you back-rent for their stay once they have steadier employment or savings.
i. Once again, the key here is clearly outline what the expectations are and talk about whether this would work for your child.
5. Help your child become financially responsible
a. Emphasize that they can stay at home for a short while as part of a long-term plan toward financial responsibility. This should involve looking for employment if they do not already have it, paying down any student debt, and contributing at home.
b. Encourage your child to sit down with you while you go over your finances to show them some of your strategies and organizational tools.
6. Help them start saving
a. Help your child set up a savings account, if they don't already have one, and if they have a job, help them set up their pay check to divert a fixed amount into their savings account every pay period.
b. Using time at home, when cost of living is low for the child, to get started on saving for the future is absolutely critical to making sure that living at home is a useful experience.