Should Parents Charge Rent to Their Adult Children?

May 28, 2019

Parents should be asking for rent from their children who live at home, particularly as more young people flock back to the nest, financial experts say. More than one-third of young adults between the ages of 18 and 34 lived at home in 2015, up from 26% in 2005, U.S. Census data shows.

“By collecting rent, you’re teaching your kids to budget, to prepare for life,” Kim Luu-Tu, a private wealth adviser with Ameriprise Financial who specializes in generational wealth planning, told The Wall Street Journal.

Susana Fonticoba of East Hanover, N.J., told the Journal that she allowed her daughter and friend to move in after they both graduated from college because they didn't have well-paying jobs to support themselves. She converted a sunroom into a living space to make extra room. Fonticoba, a self-employed marketing and business strategy consultant, wrote a rental agreement that stipulated they pay her a portion of their earnings.

Adult children who return home are sometimes labeled as lazy or entitled, Jason Houle, an associate professor of sociology at Dartmouth College who studies “boomerang children,” told the Journal. But he disagrees with that label. “It’s completely unfounded in the data,” he says. Boomerang children often only stay for a short period of time. “Most people who end up on their parent’s doorstep tend to do so for a year or two. They’re just getting back on their feet.”

The top reason that young people move back home is to save money, according to a report from the Federal Reserve’s Survey of Household Economics and Decisionmaking.

Reasons for living with parents chart. Visit source link at the end of this article for more information.

Source: 
Charging Rent When Your Adult Kid Moves Home,” The Wall Street Journal (May 23, 2019) [Log-in required.]