SALT LAKE CITY — Blame at least one more thing on the COVID-19 pandemic: more and more millennial adult kids are coming back home to stay with their Boomer and Generation X moms and dads — and bringing along the spouse and kids, too.
An expert in all matters financial joined Heather Kelly on “Money Making Sense” to talk about what parents and their returning adult children should and shouldn’t do in this situation.
Why millennial adult kids are coming home
More and more senior or mid-life parents report having millennial adult kids move back home because of financial hardships blamed on coronavirus.
Founder of Decker Retirement Planning, Brian Decker, says beginning in March half of the millennials (27 million) have lost their jobs or have had their hours reduced and are flying back to the parent’s nest.
- Half of millennials are getting help from parents to pay bills
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Some 39% of younger millennials (ages 24 to 29) say they are either planning to or have already moved back in with their parents due to the economic downturn, according to a survey of more than 2,000 young adults performed by TD Ameritrade and as reported by CNBC.
The survey also found about 15% of the younger millennials say their parents are paying part of their rent while an additional 15% say their parents are covering all of their housing costs.
Why millennials feel the pinch more than others
The three reasons your millennial is moving back in with you, according to Decker:
- Lowest seniority at job.
- $30,000 average in student debt.
- Being young, he or she has little savings.
Decker said it’s wise to sit down with your adult child and draw up a contract to outline what he or she can pay for groceries, rent, utilities, etc.
Most importantly, he said, include a projected move-out date in the contract.
Heather said that conversation could feel uncomfortable to many parents. But Decker said if you can’t have that conversation, seek the help of a financial planner “who can be the bad guy.”
“They can be mediators if there’s a problem between Mom and Dad and the adult child,” he said.
Fixed incomes can’t support extended family
If you are a senior living on a fixed income, including the expense of medication, you don’t have that extra $10 for groceries every week or month, Heather pointed out.
Decker said the adult daughter moving back in her parents just might not be an option, but he suggested working with a financial planner to see if it’s feasible.
Both Decker and Heather agreed that the parents need to help themselves first before rescuing their adult child. If the parents go down financially, they can take the child down as well.
“Help yourself first. If you can’t help yourself, there’s no way you can help others,” Heather said.
“If you continue to keep yourself on solid ground financially, you’re in a position as adults as parents to help your children,” Decker said. Otherwise, you can’t help, he said.
Helping millennials help themselves
Parents can be good coaches during this time of financial hardship, Decker said.
“It’s kind of a bonding time to do that,” he said.
Together, parents and their adults children should look at their budgets, expenses and income streams.
And together, find ways to save money so the adult children can move out of their parents’ home more quickly, he advised.
Decker reminded parents to let life lessons happen. As a financial planner, he said he has seen tragedies occur because the parents could not say no.
To bail out the adult children time after time deprives them of a tough lesson on frugality, wise investing and budgeting, he warned.
Budgeting needs, not wants
In the budgeting process with Mom and Dad, the adult kid who came back home needs to distinguish between wants and needs, Decker advised.
“For example, some of the millennials honestly believe that a car is something that they have to have,” he said.
If the adult child can’t pay for gas, insurance and maintenance on the car, they should take a bus or ride a bike, Decker said. Same goes for affording a cellphone, he added.
Heather said it’s never too late to say No to your kids, but if you haven’t said No to them in the past, Mom and Dad are going to have to start saying No a lot more before they get it.
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