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5 Things to Know if Your Adult Child Lives at Home

The young, wide-eyed son or daughter you sent off to high school, college or even graduate school is back – in your home. You're very proud of their accomplishments. However, your child may seem uncertain regarding the next steps. So here are some thoughts to help you create a positive living arrangement with an adult child as part of your household. (For related reading, see: The ROI When Your Millennial Kid Lives at Home.)

1. You're Not Alone

For the first time in the modern era, more young adults are living with their parents as compared to some other living arrangement (alone, roommates, partner/spouse) according to the Pew Research Center. Over 30% of 18-34 year olds are living at home with mom and/or dad. The percentage hasn't been this high since 1940. And, just a note: Men are more likely to live at home, while women are more likely to live with their partner/spouse.

2. What’s Going On?

There are any number of reasons. The economy is just getting back in shape; the recession took a mighty toll on Millennials, both financially and psychologically. Even with a modest recovery, good paying jobs are just beginning to reappear. Additionally, for this generation, there is a psychological uncertainty that another recession is just around the corner. Of course, some children just aren't ready to move on – home is comfortable.

3. Talk to Your Child

Conversations are key. Your child needs to know she is assuming a different role in your household; she is no longer a child – she is an adult and should have adult responsibilities. Although there is no one-size-fits-all strategy for every family, a conversation is a good place to start. This is your opportunity as a parent to share basic expectations regarding financial and living situations with your child. Additionally, don’t hesitate to ask your child what she expects while living at home. Does she realize it’s not a dorm or an apartment she's sharing with college friends? (For related reading, see: Preparing Your Children for Financial Independence.)

4. Everything is Negotiable

Know what is important to you and how you'd like your home to function. Of course, there are the basic costs such as rent or mortgage, food, and utilities. Additionally, there are other items that need to be discussed: cell phone, Netflix, cable, family dinners. And, what about the rules of the house? Have a discussion about curfews, friends, chores and employment. Everything is negotiable and, of course, there can be trade-offs. For example, it's not uncommon for parents to not ask for a financial contribution with an expectation that the child attends school and helps out periodically. But then again, the child may have to agree to a curfew and other restrictions. Don't hesitate to write a contract with all terms and conditions clearly articulated. You should be able to find a number of templates online.

5. Don't Break Your Bank

Now is the time for you to review your budget – whether actual or virtual. Even though you may be inclined to continue to help, don't forget that your child is now an adult and should be assuming adult responsibilities. You should continue to make contributions to your savings and retirement accounts. And, don't forget to share this life changing event with your financial advisor. She can help you review your new financial situation and, perhaps, have a conversation with your child.