With the slowing economy, a new phenomenon has taken hold. It’s pretty common for young people in their 20’s to move back into their parents home, but now we are seeing adults, in their 40’s and 50’s moving back in with mom and dad. Either because of a sluggish job market or the credit issues which have caused havoc with the housing market, in many cases adults have no choice but to bite the bullet and move back home.
Common wisdom among financial planners that I know is that parents shouldn’t jeopardize their financial independence in order to help out their adult children. Once your kids become adults, you should wipe your hands of responsibility.
But as I love to say, there is more to life than economics and financial planning. My question is, what is family for? Should parents take a cruise to the Caribbean when their responsible daughter was just laid off and is in a financially tough spot? Dying and getting buried with lots of money doesn’t really help. Isn’t the point of having money, aside for trying to provide a comfortable lifestyle, to try and help out those less fortunate? Wouldn’t a struggling daughter fit that bill?
If parents are themselves stretched financially, they don’t have to actually shell out money for the child. Rather, they can provide a roof and help that way, allowing the child to save hundreds of dollars a month.
I have worked with parents in similar situations. I have found that for both parents and the children who have moved back in, they find that their relationship has grown much stronger as a result.
Neither parents nor children view moving back home as a desirable outcome, but if left with no choice, would you actually refuse to support your child?
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com
July 30th, 2008 at 4:35 pm
The phenomenon of rental agreements and loan contracts with adult children is more a figment of financial planner ideals than the experience of most parents with adult children. It is refreshing to hear someone in the financial planning arena talking common sense and speaking to the real issue parents of grown children face: If they run into trouble–lose a job, get overextended on a house–do you just sail off to the Caribbean or do you re-direct your resources? Do you give them a share of your eventual estate now when they need it, or later when you don’t need it–and won’t be around to see how it helps them. Those are some of the issues under discussion on my blog on parenting adult children. You can check it out at http://www.grownchildren.net