It’s a tough time to be a young adult. Stagnating wages, inflation, and a possible period of stagflation on the horizon mean that the economic outlook isn’t exactly full of sunny skies and rainbows. For a majority of young adults, these tough economic times mean a return to their childhood home. As of 2020, 52% of 18 to 29-year-olds lived with at least one of their parents, exceeding the previous record made during the Great Depression era.
Some of the main reasons young adult children return to the nest are job loss, financial hardship, and college campus closures due to Covid-19. So, how can you help your child fly free once again and achieve their full independence? It’s not easy, but the good news is that economic downturns don’t last forever. Plus, with hard work and the right guidance, your child will soon be able to turn things around and succeed, even in the face of difficulty.
Here are some suggestions to help your adult child get back on their feet:
It’s understandable that you want to support your child as much as possible. Yet, part of that support is helping your child face the reality of adult life. Here are some points to consider:
The recession and inflation affect everyone. If your employment or retirement status has been affected by these changes, don’t be afraid to share this information with your adult child. In fact, sharing some basics about your financial situation can be important to ensure that the household continues to function. You might consider explaining some of the changes that you’ll be making before suggesting contributions that your child might make. For example, you might say “I’ll be packing lunches and taking coffee to work rather than buying, perhaps you could help pay for X item in our budget.” The goal isn’t so much to force your child to pay up, but instead for them to make a symbolic contribution that helps build a sense of responsibility.
You may also want to discuss expectations surrounding:
Many parents also want to help their children get back on their feet with generous gifts or loans. For example, you may want to pay for your child’s college tuition, invest in their new business, or fund the down payment so that they can purchase a home. Rather than make a complete gift, consider offering to contribute to a portion of these needs. Or, for example, offer to pay your child’s college tuition as a loan that can be paid back at a very low-interest rate in twenty years. This way, your child has the opportunity to show responsibility without being on the hook for a higher, more strict bank loan.
Ultimately, each family is different and you know your child and your relationship with them. Take comfort in the fact that you’re not alone. Many families are navigating this same situation right now! Before you know it, your adult will be living a more independent life. In the meantime, enjoy the closeness you can enjoy while living in the same home again.
Do you need a financial planner with expertise in working with families? Elaine King is here to help. Get in touch today!