MILWAUKEE - Due to the pandemic, more young people are moving back in with their parents. Local financial advisory Brad Allen from Drake and Associates joins FOX6 WakeUp with tips on how parents can help their adult children without jeopardizing their financial future.
Q: WHY ARE ADULT CHILDREN MOVING BACK IN WITH THEIR PARENTS?
- The coronavirus pandemic is changing our lives in unthinkable ways. Half of Millennials are finding themselves without a job or have lost income since March.
- Students are struggling with college debt. The average amount borrowed is around $30,000.
- Younger Americans also have less money in their savings account.
- All of these factors have resulted in nearly 27 million young adults now living with their parents, which exceeds the previous record set during the Great Depression.
Q: HOW CAN PARENTS NAVIGATE THEIR FINANCES WHEN ADULT CHILDREN MOVE HOME?
- Each parent-child relationship is different, and each child’s individual situation is different. But my tips will give you a starting point.
- About two-thirds of parents are providing financial support to pay for things like groceries and health care expenses for adult children who have moved back home.
- Before they move in, set clear expectations by drawing up a contract. Determine how much your adult child will pay for rent, groceries and utilities. You may even want to include a projected move-out date.
- This can be a tough conversation. Be realistic about determining how much your adult child can afford to contribute.
Teach Financial Independence
- An adult child moving home is an excellent time to teach financial independence. A great way to do this is by helping them create a budget.
- Budgeting under our new circumstances can be challenging. Many of us have to reevaluate our necessary and unnecessary expenses.
- Sit down together to discuss where their money is going and find ways to trim.
- I have a budget worksheet on my website, wealthwisconsin.com, to help you get started.
Consider Your Own Needs
- COVID-19 has been hard on our finances. About 30% of people are putting less into retirement savings or have stopped saving entirely.
- While it’s ok to help your children, make sure your finances are in order before giving others money.
- We don’t want you worrying about your long-time financial situation or having to delay retirement. There are a lot of moving parts for people in or near retirement. You should look for a financial advisor who focuses on this important age and stage of life. That’s what we do at Drake & Associates.
Seek Professional Help
- A financial professional can serve a few different roles. Not only can they help the parent with their finances, they can also teach the adult child how to manage money.
- If a family is struggling to communicate with each other about finances, a financial professional can also be the mediator for the parent and child.
- Working with a professional can help the parent work the numbers to figure out how they can financially support themselves and still help out their adult child.
- Understanding is the key to security. As we create financial plans, we make sure to explain every step so our clients can sleep soundly at night.