Watching your kids become more independent can be exciting. But helping them to prepare financially for adult life can be a challenge. As the cost of living continues to rise, it’s increasingly common for children to live at home longer, or return to the family home. Every household may feel this financial strain differently.
If you’re a parent or caregiver helping your adult child take steps towards financial independence, take a look at these tips. Just like in different stages of their younger lives, you can provide the compassion and support they need to be financially strong beyond your arms.
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What are the financial pros and cons for younger adults living at home?
There are many reasons why it can be hard for younger adults to set out and thrive on their own. Costs of living have continued to rise in Canadian cities, and finding affordable housing can be challenging. This makes it advantageous for young people to continue living at home for longer, or to return home during a time of financial hardship. There can be advantages for all members of the family in this situation, including:
- Everyone can pitch in and share household duties, like chores, shopping, preparing for holidays, and so on.
- Living together as a family can combat loneliness and isolation, and make childcare or elder care easier.
- Younger adults can gain independence incrementally and gain financial skills within the family safety net.
- Pooling financial resources can help ease cost of living burdens across the family when everyone contributes.
This living situation can also have challenges, such as:
- Continuing to support adult children can put a strain on parents’ or caregiver’s finances and negatively impact saving for retirement.
- More people under one roof means a higher cost of running the household, considering utilities, groceries, and regular bills.
Home not alone: Young adults in Canada
In Canada, about 35% of young adults between the ages of 20 to 34 are living with at least one parent. One study highlights the lack of affordability of big Canadian cities. Almost half the households in Toronto (47.4%) have adult children living at home — the highest rate in the country.
How can you budget with your adult children at home?
There’s no escaping the math, the more people in your home, the more mouths to feed. But that’s not necessarily a bad thing. Here are some tips for living well under one roof if your adult children are at home. As a parent or caregiver, you can:
- Set clear boundaries – Everyone living at home should contribute to the household in some way. Transparency is key. Have an open dialogue about who will contribute to the household in what way. For example, sharing chores, financial contributions, or sharing common spaces. This ensures everyone has clarity around how they’ll contribute, and can prevent feelings of resentment.
- Have open and honest, adult-to-adult conversations about money – Many young adults don’t know how much it actually costs to run a household. Show them your budget and include them in a conversation about how they can lighten the load for you and the rest of the family.
- Consider asking your child to pay rent – Make it part of your living at home agreement, even if they only contribute a small amount. If you don’t need the money, consider putting it into a savings account and giving them the money when they move out.
- Make the shift from provider to money coach – This can be a tricky transition. Moving into a role where you provide guidance and wisdom rather than resources is an important step in their journey to financial independence.
- Decide on a flexible timeline – It can be both daunting and exciting for you and your adult child to prepare for their departure from the nest. Having a timeline can help give structure to their stay at home. Consider a 12- or 24-month timeline that includes a budget and savings plan to help them reach their goal of independence. Revisit and adapt the plan periodically.
- Listen to their ideas – Invite your grown child to share their plan for independence with you. If they don’t have one, ask them to create one and then talk it through together. If your child is an active participant in making a roadmap for their future away from home, they’re more likely to put that plan into action.
Multigenerational households
Multigenerational households are increasingly common in Canada. It means kids, parents, grandparents and aunts or uncles may all be living under the same roof.
Multigenerational families benefit from advantages like pooled resources and shared labour. They also may have improved quality of life and better mental and emotional wellbeing. Grandparents stave off the loneliness and isolation many seniors experience when living alone. Parents get extra support with raising children. And kids develop connections to their elders and family.
In Canada, it’s common for newcomer families to live with their extended families. This is not solely to pool their income and savings, but also to support each other in navigating a new culture and often a new language.
Like any household, it’s useful in multigenerational homes to have open and honest conversations about money and to discuss how everyone can contribute.
Summary
There are pros and cons to family living under the same roof. If you are the parent or caregiver of an adult child, you could help them to work toward financial independence by:
- Helping build their money management skills.
- Sharing household expenses and chores.
- Switching your role from provider to coach.
- Planning a timeline for when they might move out.
- Listening to their ideas for financial independence.
