The Pew Research Center found that some 36% of all 18 to 31-year-olds were living at home with their parents in 2012.  As the parent of one such child I fully understand what life is like under those circumstances.  I want to offer a few financial planning tips to those of you who are in the same situation.

• Prioritize your financial future over your child’s future. Of course you love your child and want the best for him. Resist the temptation to take the money you had set aside for retirement travel or for that vacation home in the mountains and give it to him instead to pay for a new car. Or even to pay for his belated college education (which he failed to complete five years earlier because of all his partying). Your money should be used first to support your own current and future goals before giving it up for his. Unless you’re planning to sponge off him when you grow old (good luck!), you first need to make sure your own future is financially secure. After all, your adult child will have a much higher potential for earnings as well as a greater ability to borrow as compared to you, particularly once you are retired. Also keep in mind that if you are currently his primary support system and your own finances become stressed, that puts the entire family at risk.
• Keep your number one goal in sight at all times. Simply put, you want to get her out of the house as quickly as possible. So be practical about the expenses you decide your child should cover. If you want to charge her rent, don’t make it too high or she’ll never accumulate enough money to be able to move out. What about food costs? Or gas when she uses your car? Her cell phone bill? There’s no standard rule, but it’s helpful to consider her circumstances when making these decisions.  And don’t forget about those student loans she’s shouldering.  You can also choose to put a time limit on certain expenses (e.g. for the next six months) to make sure your own financial situation doesn’t deteriorate as well as to keep uppermost in her mind the idea of leaving.
• Negotiate the household rules. You may expect him to do his own laundry, or wash the dishes after the family’s dinners. But forcing him to do things he especially dislikes could create a lot of disharmony which will negatively affect everyone’s quality of life. It’s usually helpful to have a discussion with him prior to setting the rules rather than doing it unilaterally. You ought to know your child well enough to be able to agree on a compromise with which everybody can live.
• Create businesslike financial arrangements. Requiring her to pay rent? Lending her money to buy a car? Planning to help her with the security deposit on her apartment when she moves out? It’s best to create written contracts with well-defined payment schedules. Not only will that help when any misunderstandings arise, it creates a legal-like framework that will encourage her to treat these agreements as serious commitments on her part.
• Don’t treat him as a child anymore. This is perhaps the toughest challenge. When your grown child moves in, you become not just parents but adult roommates. Your goal and his goal is his independence. So what if he purchases that $500 guitar? Maybe he loves playing and needs it to bolster his self-esteem. Be sensitive about butting in to every financial decision he makes. On the other hand, you do want to make sure he doesn’t do anything rash, like signing a lease for a new Tesla. Hopefully you’ve brought him up to understand money and how to manage it. If not, get help from your financial planner if you have one. Most planners should be very glad to help educate your child on money management.

The most important framework you can use for helping your adult child is your own retirement plan.  If he or she unexpectedly shows up on your doorstep (metaphorically speaking), that would be the kind of life-changing event to warrant an update.  And after adjusting the plan for the added expenses of supporting your child, the impact on your own future goals should become readily apparent.  Planning to downsize your home, for example?  You might want to delay that if your child is still in the house.  A retirement plan will help you make tradeoff decisions between your child’s goals and yours.  You might even want to share the plan with him or her so that he or she can appreciate just how much financial support you are actually providing, and at what cost to you.

If you think raising a child was tough, wait until you have to raise an adult!