It is becoming more and more common for adult children to move back home after trying their hand at living on their own. As the parent, you are forced to face the reality of either supporting your grown child or exercising some tough love and making them pitch in with expenses.

You also need to figure out what will happen to the household finances with the addition of an extra adult. Here are some great tips to help you handle the finances when your adult child moves back into your home.

1. Set guidelines

Even before your child officially moves in, sit down together and set the rules. Discuss your child’s needs, as well as your own, so that you can make the arrangement as equal as possible. Just because your child is an adult, there is a chance he will revert back to the child-like role in your home, expecting you to act as a parent to a child. Remember, he is grown up, and should contribute accordingly. Talk about the ground rules for the new living arrangement. Discuss topics such as:

  • How long your child expects to be living under your roof.
  • What you will allow in your home in regards to drinking, smoking and guests spending the night.
  • What is expected of your child. For example, should he be actively job-hunting if he intends to live with you? Should he have specific chores to do around the house?

2. Don’t Be An Enabler

As hard as it is, you need refrain from letting your adult child financially rely on you. It’s very easy to revert back to taking care of your child by allowing her to live rent-free. Not only will this enable her to revert back to childhood ways, it will justify her natural tendency to rely on you. If you do plan to help your child in a monetary way, make sure she is actively looking for a job or doing something productive, and not just spending time on your couch. It may take some tough love, but you will need to put your foot down and set the rules.

3. Split Up The Household Costs

Now that your child is an adult, he should be treated as a roommate rather than as a child. Household chores and expenses should be shared. Have him pitch in with the utilities and groceries. If he plans to use your car, he should fill the gas tank whenever he uses it. If he is not working at the moment, chores such as yard work, cleaning and cooking can take the place of a financial contribution. You may want to reexamine your household budget and make a new one to include the extra food and utility usage for an extra person.

4. Be Prepared For Money Requests

This tip is especially important for parents of adult children who are not currently working. Before your child moves in, take the time to figure out what you plan to do when she asks for money. If you intend to lend money, determine where the money will come from and what the terms are. Will it be a loan or a gift? How long will you give her to pay you back? You may want to set up a payment plan to make it easier for her to pay you back. Also, make sure you are even in the position to lend money before agreeing to it.

5. Teach Your Child To Save

If your adult child is currently working, push him to save some of his income each month in preparation for when he will live on his own. This plan will help him gain independence and move out quicker. It will also teach him how to budget his money wisely prepare for the future. You may also want to teach him how to save as a long-term goal. Encourage him to participate in his employer’s 401k plan. If his employer does not offer a 401k plan, talk to him about opening an IRA. The idea is to teach him how to save money so he can be financially independent for the rest of his life.

After graduating from college or living on their own for a while, adult children often end up moving back home with their parents. This leaves the parents with a dilemma; do they help support their grown child, or do they expect them to contribute financially in the home? If you find your adult child moving back in with you after living away from home, use these 5 tips to help you set up a plan and determine what you will do regarding the finances.

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