Your Adult Child Is Moving Home: Should You Charge Rent?

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kids rentWhen Carol Weis’ daughter graduated from college in 2006 with a degree in sociology, she didn’t have a job waiting for her. So, she got a lackluster retail gig and moved into her mom’s Massachusetts condo. At the time, Weis, who works as a substitute teacher and editor, says she wouldn’t have dreamed of charging her daughter rent.

“I was a perfectly codependent mom,” says Weis with a chuckle. “I always stepped in and took care of her—maybe because I felt guilty that her father left us when she was six years old.”

Weis’ daughter is now 29, and seven years later the two are still living together. But, as her daughter got better-paying side jobs in between studying for her master’s in social work, Weis knew it was time to broach the idea of having her make a financial contribution—if not rent, then at least splitting the household bills.

“Initially, she wasn’t thrilled about the idea of paying for some of the bills,” Weis says about her daughter. “But she knew it was the right thing to do.”

Today, the two split the bills for electricity, water and the rest of their utilities.

To Charge or Not to Charge?

From sharing the utility bills here and there to paying rent every month, when your adult child moves home, should you ask him or her to contribute financially? It’s a thorny question many parents are grappling with these days.

Consider the numbers: 21.6 million adults between the ages of 18 and 31—or 36% of people in this demo—lived at home with their parents in 2012, according to the August 2013 Pew Research Center report “A Rising Share of Young Adults Live in Their Parents’ Home.” This is the highest share in 40 years.

Experts call these children “boomerang kids,” and when a grown child moves back home, it’s important to make sure that everyone is on the same page, says David Blaylock, a CFP® with LearnVest Planning Services. ”The first conversation that needs to happen is resetting boundaries. Keep in mind that they were probably in high school when they last lived at home, so they shouldn’t be returning to the exact same rules as when they left,” he advises.

As for paying for the privilege to move back in, Blaylock believes parents should charge a nominal fee for rent, but one that’s way below market rate. “I would advise that parents not charge more than 10% of the child’s take-home pay,” he says. “The amount should be enough as to feel like a responsibility, but not so much as to be a burden.”

Parents Who Make Them Pay

Sherman Ragland, a father of three, wouldn’t dream of not charging his adult daughter rent, especially since his rate, $450 per month, is a fraction of what she’d pay if she lived on their own.

His oldest daughter worked in retail while she was in college. When she graduated in 2009, she had her own apartment and worked a full-time job at a major department store chain. But a few years ago, she decided to switch careers to government contracting, which would mean taking a pay cut. “We suggested she move in to save some money,” says Ragland of his now 26-year-old daughter.

He is far from a traditional landlord. In fact, he still thinks of his primary role as being that of generous father. Case in point: What his daughter doesn’t know is that he has been setting aside all of her “rent” in an account for her to have once she’s ready to move out.

Blaylock isn’t necessarily a fan of this setup. “Instead of saving the money without the child knowing about it, you’re missing out on a teaching opportunity,” he says. “The goal is to help your child manage her assets better, so talk about why you’re putting the money aside. Otherwise, it’ll be like Mom and Dad to the rescue again … ‘Here’s this big pile of money!’”

RELATED: Big Families, Not-So-Big-Budgets: How We Make It Work

  • http://www.adsactly.com/t/adsactly Micah Wallace

    Excellent Article many parents will find this very informative thank you!

  • sam_the_cat

    I think that 10% of their take-home pay sounds very reasonable. It will foster a more adult relationship, preventing the child from feeling like a mooch and preventing the parents from feeling taken advantage of while still allowing the child to save up some money.

  • betty marie waldeck

    my parents would not do that for me they are selfish and do not know how to budget their money.

  • Steph

    Too bad the reason many people have to move back home because our parents generation messed up the economy. Also most of our parents lived at home rent free until they got married in order to save up to buy a house but now we’re being blamed with not buying enough houses.

  • Smitty Jl

    Absolutely they should pay rent and do chores. Teaches financial resp and keeps them frm getting to comfortable. Otherwise they will never move out.

  • Marissa

    I live at home and contribute $500 rent per month. This covers my portion of the cell phone bill, car insurance, and some extra cash that can be applied to bills or groceries. I help out with dinner, dishes, taking care of the dog, etc. Its a great living arrangement and I would rather pay my mother rent than some sketchy landlord.

    • emmaly

      You are very lucky to have a split phone bill and auto insurance! Not trying to talk down to you in any way, I just hope you realize what a great benefit this is & put the money you’re saving to good use :)

  • LIDARKSIDE

    How is this even a question. In my day, adult children had to pay rent. Today, my adult children have to pay rent. Ten percent of their pay is ridiculous. That wouldn’t even begin to cover the additional expenses the parents would have to incur for the adult child to live there–electric, water, sewage, food, etc. It’s usually around 25% of their pay as a rule of thumb. I go with 20% or $100 per week, whichever is less. I was already paying $30 per week back in 1981. In the real world, 10% of their pay won’t even begin to pay for all of their expenses. Your supposed to help them out, not get so spoiled by the lack of expenses that they never go out on their own.

    • oldschool

      I totally agree with you. I too am shocked that this is questioned. I started paying rent as soon as I turned 18 (1989). I worked part-time and made $6.25 an hour. My rent was $130 per month, which did not include car insurance or the car payment I had to pay because my dad got me a car for graduation (that, even though I am grateful, really didn’t have the money to afford). I lived on $12.50 per week for spending money. I can’t believe how spoiled and entitled kids are today!

      • Enabled

        Blah blah blah, this generation is the worst, blah blah blah. Let me just point out who is raising this generation.

  • imdb

    Mr. Ragland, you rule! As long as our children are hand fed, they will continue to take what we give. I work two jobs, and attend school. That’s my reasoning behind everything now. If I can do this, you can too, and pay rent. And Mr. Blaylock, do you have adult children at home?

  • ArchieBunkersBoomeranger

    I lived with my parents after college many years ago, as my username suggests. I paid half the household bills, although they were reluctant to take the money, simply because it made me feel more grown-up and more comfortable about living at home.

    But they took all the money I gave them and put it in a brokerage account in my name. This kept on growing after I moved out, so that when I lost my job at age 64, I had over $250,000 outside my 401K. This means that instead of raiding my 401K and taking reduced Social Security benefits, I can live on the brokerage account till I’m 70, and then begin my Social Security and 401K.

    If you don’t need your child’s rent money, you might consider taking it and investing it. It will benefit him greatly to jump-start his retirement savings when he’s fresh out of school.

  • momofthree

    Of course, they should pay rent. If they are adults they should contribute to the household. My daughter, age 23, pays $300. a month, for room & board. That’s a pretty good deal for her, since over half of it goes to her share of the food. This does not include her cell phone, her transportation, clothes, Starbucks lattes, etc. Oh, and as part of the deal, she agrees to put 10% of her earnings into her IRA, and 15% into her savings. That still leaves her, on a minimum wage job, plenty of $ to spend on herself. (A lot more than I have!)

    • Enabled

      Maybe the lesson should be that she shouldn’t buy Starbucks lattes when making minimum wage at the age of 23….

  • Paul

    A portion of my first “real” paycheck went to my first rent payment. A lot has to do with the “goals” of the adult kid. If they’re in limbo they need to pay a good portion of their income. If they’re saving up to buy a place (and actually saving the $$) then cutting back might be a good idea to help out.

  • Mc Fire

    American parents and their way of teaching their kids “financial responsibility” by making their kids pay rent is ridiculous. If you don’t need the money, don’t charge them. If you do, save it for them. Taking money from your kids for “rent” means you’re just greedy. Their bedroom would of be left spare anyway if they didn’t move back home. I lived with my parents after college for 4 years so I could pay down student loans and save money for a house. In those 4 years, I was able to pay off my student loans (12k) and saved ~20k for a house down payment. I wouldn’t of been able to do that if they were charging 500 bucks a months. Thank god my Asian parents don’t follow American culture.

  • ellie

    Wow. Im shocked to hear so many people blaming their
    folks that they have to pay rent. You are misinformed our generation lived home
    until marriage or lived home to save $ for a home. Most of us worked for a good
    period of time, rented and saved until our first home purchase. Many of us had
    parents who couldn’t wait till the kids graduated high school so they could
    move and retire someplace affordable. It was ‘sorry kids its time to fly’.

    We are in a different day and age. Adult children are in debt like never before with increasing education costs, parents can no longer do it
    all. Multiple incomes are needed to maintain a single household these days,everything has doubled since the day I bought my home, taxes, heating fuel
    ($4000 this winter alone!!) food! Its nearly impossible for a young adult to make ends meet on their own especially with student loans looming over their
    heads. If everyone wants to remain in the family home it makes sense everyone contributes and benefits. Is it that unusual?

    I have 2 adult children at home. The oldest, a college junior at the time, moved home pregnant 8 years ago. Yes I now have a 7 yr old grandchild home as well. My son moved back home 2 years ago after 4 years in the military and a year away at school. She pays $500 mo (2 people) and he pays $400 mo.

    Maybe this seems like a lot to you… but consider this. I would have long ago sold this big old house had they not all moved back home. Its too big, too much work and too expensive for just the hubby and me. Life would be much simpler and affordable if we sold and got a condo with ONE EXTRA bedroom for GUESTS lol.

    So forget the fact ‘the kids’ share 1200 sq feet in a downstairs apartment, they are lakefront with a lovely view, their own porch and entrance (we dont need to see each other for days if we dont want lol.)

    The miscellaneous things provide in the household they have access to a normal tenant would have to provide for themselves. To name a few food/meals, internet,
    cable, heat and electric, washer/ dryer, grill&propane, water of course but beyond! There are things they very rarely if ever supply/replace for the household. They take/use, stamps, light bulbs, laundry detergent, paper/plastic products, and don’t get me started on
    the bottled water and batteries!! All the same things youd expect from having your children home, whatever the age. Someone ate my leftovers, left dirty
    dishes, left clothes in washer….

    And it will break my heart when someone finally flies the coop im sure. Such is life.
    But seriously, they are well aware they have the better end of this deal. And they are grateful they know a certain amount of their income is designated for rent.