I recently came across a news story about a hapless New York couple, who have taken their 30-year old son to court in a last-ditch effort to get him to move out of home. My first thought was “only in America”. But here in Australia, high rents and low housing affordability are seeing plenty of parents shelve plans for an empty-nester lifestyle as their 20-, 30- and even 40-something offspring show no signs of leaving the family home.

Research by Finder shows 40% of 20 to 24 year-olds still live at home, and even one in ten 30-somethings, and about 5% of people aged 40-plus still share a roof with mum and dad.

When does the rent-free ride stop?

Many parents relish having their children at home for longer, and there is a whole variety of reasons why multi-generation living is becoming more commonplace in Australia – anything from cultural norms to rising rents. While it can be unfair for one generation to shoulder the financial burden of many heads living under one roof, the issue of whether or not to charge adult children board can be very contentious.

Finder found some parents say the rent-free ride should stop when children turn 19. One in five believe their child should pay board when they land a job, and a similar proportion of parents is against the idea of charging board altogether.

The thing is, parents can be fantastic teachers when it comes to helping kids of any age manage their money and learn to live within their means to enjoy a financially sustainable future. Sure, if your son or daughter is studying or in an apprenticeship, they probably don’t have much cash to spare. But continually providing a free ride when your kids are earning an independent income can encourage an artificial view of how the world works.

More to the point, shelling out for adult kids can prove a drain on parents’ finances at a time when they are nearing retirement.

A stepping stone to independence

Charging your children board – even just a small amount, when they have the capacity to pay, is a stepping stone towards adulthood. And for parents who could be looking at spending 20 or more years in retirement, every bit helps to stretch their own money further.

If you’d prefer your adult child to start paying their way, try to approach the subject with tact. No one enjoys a surprise announcement that they’re suddenly expected to cough up cash on a regular basis. But be firm. However much you choose to charge, it is important that board is paid regularly. This sends a strong message that bills need to be paid on time, and they need to be paid first, ahead of life’s luxuries. Surely that is an essential life lesson we should pass onto our kids!

– by Paul Clitheroe AM
Paul Clitheroe AM, co-founder and Executive Director of ipac securities limited, Chairman of the Australian Government Financial Literacy Board and Chief Commentator for Money magazine.

Online source: Produced by AMP Life Limited and published on 25 May 2018.  Original article.