Your Kid Just Graduated from College and Needs to Move Back Home. Now What?

Congratulations! You’re the parent of a new graduate. You’ve watched them accept that all-important piece of paper that is often a rite of passage into adulthood.

Now what?

With the rising cost of living, more parents than ever are welcoming their kids home after they graduate. While this isn’t unusual, it is important that both you and your student are on the same page when they hit the door.

What You’ll Pay for…and What You Won’t

While the point of moving back home is – hopefully – to save money and be able to leave the nest at some point, it’s important that your child has some financial responsibility. Maybe it’s paying for their phone or planning and making a family meal once a week. These guidelines can not only help you help THEM budget and get ready for the real world, they can also instill a sense of pride in your student who might be embarrassed that they’ve had to come back home.

Should They Live with You Rent Free?

That’s up to you. However, as a financial advisor, I think it’s important that your kid has some skin in the game. Even if it’s a small amount that you end up depositing in a savings account for your child, it gets them in the rhythm of paying that monthly bill.

Understand Everyone’s Timing

Yes, I know this is a sensitive subject, but it’s important that the lines of communication are open right from the start. Chances are, your kid wants to get out on their own as soon as possible, but it’s always possible that this could stretch out longer than you’re comfortable with. Sit down and talk to your graduate about your expectations regarding how long they will be staying. Make it clear that you understand that this could change based on the job market but be upfront about the fact that there is a time limit.

This is also a good time to discuss your child’s goal when it comes to saving. Are they trying to save enough to move in with a roommate? Are they working toward saving for a down payment on a home? It’s important for you to know what they’re working toward; you can help encourage them and you’ll also probably be less frustrated knowing there’s a plan.

Don’t be Afraid to Discuss Your Own Financial Situation

Nothing can derail a retirement like supporting an adult child.

From buying groceries to paying for their cell phone plan or covering health and auto insurance, 45% of parents with a child age 18 or over provide them with at least some financial support, according to a recent report by Savings.com.

On average, these parents are spending more than $1,400 a month helping their adult children make ends meet, the report found. (CNBC)

The little things you do to help your child could mean you’re putting less into your retirement accounts – and chances are you’re closer to retirement now than not. This is the time when you should be contributing the most to your retirement accounts, so pulling money away from that initiative isn’t helping you in the long run.

Your kid needs to understand that this is a real problem that could affect them in the future – because you’ll have to financially depend on them as you age.