Should you charge your graduate child rent?

Story

`With an increasing number of graduates returning home after university, it’s the question many parents are asking themselves.

Dubbed the ‘boomerang generation’, young adults graduating from university are immediately moving– or ‘boomeranging’ – back in with their parents. Some are even returning to live with their parents after living independently for many years. According to the Office for National Statistics, in 1997, around 25% of under-34s were living in their parents’ home. Today, that figure has risen to 32%, and it’s even higher for men; 37% of men aged 18 to 34 lived with their parents in 20171. So why would young adults sacrifice their independence to live like teenagers again?

Blame soaring house prices and a marked increase in the cost of living, making it impossible for many to step on the property ladder, or even rent – especially those just entering the world of work. The despair many children face has forced parents to take them back in, allowing parents to once again enjoy what flew the nest at 18, and making it a sensible way for children to save in order to afford their own place.

But who writes the rule book for their return? If they’ve just graduated, `with no employment experience, how long are you willing to financially support them? If they already have a job and move back home, how can they contribute? Paying rent, or doing designated (and sometimes undesirable) household chores? Whatever it is, the transition will be easier for both with clear ‘guidelines’ in place to manage expectations.

Charging your children rent – even if a negligible amount – could help instil a level of discipline. Paying rent means getting a paid job, so it could help them become active job hunters if they’re unemployed. Helping around the house will lighten the load for you, but will also allow your children to reciprocate what you do for them – be that laundry, dishwasher duties or cooking the evening meal.

The disparity between rising house prices and salary has left this generation, alongside millennials, worse off than their parents, which means the road to true independence may be a long and difficult one. But it isn’t impossible. Financial instability and being robbed of your independence because you have no choice can be crippling, both emotionally and mentally. But with mutual agreements and a healthy dose of discipline, the end goal for your child – to save as much as possible, as quickly as possible – will feel more attainable.

1. https://www.theguardian.com/money/2019/apr/20/the-boomerang-generation-still-living-with-their-parents

News

Find all the latest industry news, all written by our in-house industry experts.

Estate planning for blended families - 3 things to think about

Estate planning for blended families - 3 things to think about

Story 20/08/19

A blended family coming together can be an equally positive yet confusing experience for many. New living arrangements call for a proper review of your financial situation.

Residence nil-rate band - will it benefit you?

Residence nil-rate band - will it benefit you?

Story 14/08/19

This additional threshold could relieve the burden of inheritance tax for many families, but it's subject to a number of rules. Do you know whether the residence nil-rate band applies to you?

If I need long-term care, how will I fund it?

If I need long-term care, how will I fund it?

Story 07/08/19

Previously, we talked about what long-term care is and how you can start planning for it. Now, we look at the funding options available for you to consider when it comes to long-term care planning.

More Articles

Get in touch

To discover how AFH's unique approach to wealth management can help you build a better future, please contact us.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.