The financial aspect of sharing a home with your adult children: A guide for parents.

As the cost of living continues to rise, many adult children, or “boomerang kids link opens in a new window,” are moving back home with their parents after living independently. In fact, according to U.S. Census Bureau data link opens in a new window, an estimated 1 in 3 U.S. adults between the ages of 18 to 34 live in their parents’ home.

Additionally, Thrivent’s 2024 Boomerang Kids Survey link opens in a new window found that nearly half of the parents surveyed have had their children move back home at some point, with the ongoing rise in housing prices being a primary driver. Although many young adults struggle to afford independent living, for others, changes in family dynamics such as caregiving responsibilities or divorce might make living at home a more appealing option.

This arrangement can provide financial relief to both generations, but it also brings new challenges that need careful consideration. Parents and children alike must navigate a new living dynamic, and it’s imperative to have open communication about your financial expectations. In this article, we explore the financial aspects of having your adult children move back in, the benefits and how to set clear guidelines to make the arrangement work for everyone involved.

What to consider when sharing a home with adult children.

Ultimately, a multigenerational living arrangement can offer potential benefits to all parties involved, but it requires a shift in perspective and careful financial planning. Here are some things to consider beforehand:

• Increased household expenses: Start by understanding the impact of having another person in the home on your household budget. Increased utility bills, food costs and other daily expenses can add up quickly. Although the financial support from your child may ease some of this burden, be prepared to adjust your own financial expectations accordingly.
• Contributions from the adult child: It's essential to discuss and agree on what financial contributions everyone will make. You may choose to charge rent or request a monthly contribution to groceries and utilities. Or, perhaps you prefer to have your child contribute in other ways, such as helping with household chores or repairs. Whatever the arrangement, clarity is key to avoid misunderstandings and ensure both parties feel comfortable.
• Opportunity costs: If you’re nearing retirement or using savings to support your children, the financial burden may go beyond household expenses. The cost of supporting an adult child can reduce the amount available for retirement savings or other long-term financial goals. It’s important to determine whether any potential financial sacrifices are sustainable in the long run.
• Shared checking accounts for household bills: One question that can come up is whether to open a joint checking account for the purpose of handling shared household bills. While this can simplify payments, it may also introduce complications. Some families find it works well to have a designated account for household expenses, but others prefer to maintain financial independence. If you do decide to share an account, make sure everyone is clear on the amounts to be contributed as well as the responsibilities associated with the account.

Cohabitating: A mutually beneficial relationship?

While the arrangement can be financially beneficial for everyone involved, it can also strengthen family bonds. For parents, having their children back at home can foster closer relationships and provide support in times of need. For adult children, living at home allows them to save money and pay down student loan debt or other financial obligations.

Furthermore, the arrangement can offer parents the opportunity to provide mentorship and guidance as their children navigate life after college or in a challenging job market. It also benefits those who are involved in caregiving, as shared living can offer both emotional and financial support in times of transition.

Setting expectations and creating an agreement.

Perhaps the most important aspect of the living arrangement is communication. Having a frank discussion about expectations upfront can help prevent future conflicts. Some of the key areas to address include:

• Financial contributions: Discuss how much the adult child will contribute toward rent, utilities, groceries or other household expenses. Some parents may charge rent based on market rates, while others may adopt a more informal approach.
• Household chores: Set expectations for cleaning, cooking and other household responsibilities. A clear division of labor can prevent resentment and misunderstandings down the road.
• Timeframe: One potential source of tension is the duration of the living arrangement. Some reasons for a changing timeline could include a new baby, needing to sell the home or illness. Should there be an agreed-upon timeline for when the adult child needs to move out? Some families set a specific timeframe, while others may prefer a more flexible approach.
• Privacy and space: Living together as adults can bring up issues around privacy. Be sure to discuss how to respect each other's space, including personal time and areas of the home.

By putting these expectations in writing, you can create a fair and transparent arrangement that both parents and children can agree on. A written agreement can also help resolve conflicts if misunderstandings arise in the future.

Financial and emotional considerations.

Living with your adult children can be a rewarding experience, but it is important to balance emotional and financial needs. Parents should not only focus on the financial aspects but also consider the emotional impact of the arrangement. The presence of adult children at home can create both joy and stress, depending on family dynamics and the specific needs of each individual. In fact, if you’re in the market for a home, the United States just experienced its highest-priced April ever recorded in 2024, according to the National Association of Realtors link opens in a new window. It’s no surprise adult children are considering moving back home to save up and build financial security.

For parents nearing retirement, it is especially important to consider how this financial support might impact long-term plans. Can you continue to help your child without sacrificing your financial security? In some cases, seeking professional advice from a financial planner may be worthwhile to make sure that all parties involved are on the same page.

Avoiding conflict with your boomerang child.

The boomerang kid phenomenon is a reality for many families today, driven by rising living costs and a range of other social and economic factors. Sharing a home with your adult children can offer financial and emotional benefits, but only if expectations are set clearly and agreed upon in advance. By discussing finances, contributions and time frames, you can avoid conflicts and create a living arrangement that works for everyone.

Remember, the key to success is open communication, setting boundaries, and making sure that everyone involved feels comfortable and respected. With the right approach, living with your adult children can be a mutually beneficial experience that strengthens both family ties and financial stability.