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Financial Foundations for Boomerang Kids

You were on the brink of becoming a bona fide empty-nester when one of your fledglings unexpectedly flew back home. What’s the smartest way to handle a boomerang kid—for their sake and your sanity?

Treat it as an opportunity, advises Carrie Schwab-Pomerantz, president of Charles Schwab Foundation. “It’s a different world today,” Carrie notes. “Far more young adults live at home than ever before.” Indeed, according to the Census Bureau, some 30% of young adults ages 18 to 34 live with a parent. 

While Carrie acknowledges it can be stressful having an adult child on your hands, she emphasizes that this time back in the nest may give your kids a chance to strengthen their financial foundation—with your help. “Some kids take a little longer to find their footing,” says Lisa,1  a 59-year-old whose sons both moved back home after they graduated. 

Here are five steps you can take to help your young adult get on his or her feet and set up a solid foundation for the future.

Step 1: Discuss goals

When Lisa’s oldest son moved home right after graduation, it led to some very open discussions about plans and finances. “You can’t worry about hurting your child’s feelings when you have to talk about money,” Lisa says. In her case, she used a discussion about various household expenses to jump-start a dialogue about her son’s role in the family economy, as well as his future plans.

Carrie suggests asking your child how long they plan to stay home, and what their aims might be. Even if they don’t have solid answers yet, it’s important to keep this conversation going—perhaps establishing mini goals that lead to larger ones. 

Whether your child’s plan involves a job, grad school or another route, Carrie stresses that simply having a goal is key. Once they’re clear about what they want, you can help them, she says, “whether it’s with job applications or networking.” 

Step 2: Set house rules

The earlier you set expectations for both you and your child, the easier it will be to live together. That means deciding how you want to share living quarters (quiet hours, car usage, who empties the dishwasher) as well as manage household expenses. 

Lisa suggests taking a kind but firm tone. “There’s no need to sugarcoat anything. Explain that they need to adjust the thermostat when they leave the house—the same way you do. Show them a utility bill to help get your point across.”  

Many young adults leave college without a clear sense of certain financial realities, Carrie notes. “Having concrete discussions will be helpful.”

Related video: “Modern Family Finances: Adult Kids at Home”

Step 3: Help them make a financial plan

Your child’s financial plan will depend on their goals. A budget will help them achieve it, but let them know that it goes beyond tracking expenses. 

Lisa has always tried to instill a sense of planning and saving in her sons’ minds. “Years ago they wanted to buy a Nintendo system,” she says. “I told them to save and pay for it. And they did.” And when both sons moved home, Lisa went online to find basic budgeting forms or links to apps that she could share. 

“Encourage your child to have a line item for savings and an emergency fund,” Carrie says. And although your children can stay on your medical insurance plan until they’re 26, it may involve additional payments on your part. So discuss medical insurance and set up a plan with your young adult.

If you aren’t confident in your own financial knowledge, this can be a chance for you to learn. “At the very least take your child to your financial institution and have a consultant talk to them about saving and investing,” Carrie says.  

Adult Kids at Home? 5 Financial Foundations for Boomerang Kids

Step 4: Get serious about college debt

According to a joint study by the Pew Research Center and The Chronicle of Higher Education, many students are leaving college with major debt. Almost a quarter report that this debt has affected their career choice and half report it affects their ability to pay off other bills. 

Even if your child has minimal student loan debt, or perhaps only some credit card debt, they still need a plan, Carrie says.

First get a sense of what your child owes, and whether they’ve started paying it off. (Many college loans offer a six-month grace period after graduation before payments start.) Carrie suggests helping kids set up automatic payments and recommends turning this process into a lesson about establishing and maintaining good credit.

Step 5: Take care of your own finances

“It may go against the grain as a parent,” Carrie acknowledges, “but don’t let helping your adult children interfere with your own retirement savings.” A Hearts and Wallets survey reported that only 21% of baby boomers who support their adult children are fully retired—compared with 52% of those who have children but don’t support them.

To help keep your plan on track, when you’re making financial choices about your kids, be realistic about your own situation. The cost of supporting a young adult can add up:

  • Increased insurance costs (for example, medical and car)
  • Wear and tear on your home
  • Uncovered medical bills
  • Miscellaneous expenses including food, utilities, transportation and cell phone service—even spending money

Jeopardizing your own future won’t help your children and can increase the burden on them down the line. “The best thing for you to do is to make sure you’re financially on track—it’s the right thing for yourself and a positive lesson for your kids,” Carrie says.

1We use pseudonyms to protect the privacy of interviewees.

What you can do next

Living with adult children can be both a challenge and a joy—but ideally it should be temporary. If you have a boomerang kid:

  • Start the conversation about a timeline and goals, and check in on progress.
  • If you intend to help your child financially, talk to a Schwab Financial Consultant about ways to do so without affecting your own plans.
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Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. 

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. 

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.


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