According to the US Census Bureau, ⅓ of Millennials (around the ages 18 and 34) are currently residing with their parents. The reason behind this could vary anywhere between looking for a good job offer, paying off student loans, or just pursuing a higher education. As much as that parental love would like you to believe you are helping your adult child by housing them for free, it is wise to have them pay rent instead.
Financial Stability isn’t taught in high school, let alone college.
People have a tendency to seek for an easy lifestyle. Having your adult child come back and live rent free creates a lack of motivation in their mind to push through and seek advancement, as well as having a high chance of growing up without learning the necessary skills of surviving society on their own. By having them pay rent, you push your child to find a job in order to sustain paying rent, thus motivating them to put their degree to better use if they are still working in retail or fast food. Not only that, but you also create a scenario where the child needs to learn how to manage their cash flow to pay for rent, student loans, and other necessities they may need.
We don’t recommend you charge the market value rent, but instead start with a discounted price around $100 – $200. You don’t want to push the child immediately to the real world, but instead have them start learning on the difficulties of saving money. This amount can be raised by 5% as seen fit every interval.
What should you do with the money
There are two approaches that we recommend to use the rent money being paid. You can either use them to support the family and pay utilities and/or groceries, or you could secretly create a savings account for them to hand them at the end of their stay.
If you take the approach of having the rent money pay for utilities, it is important to let your child know what exactly they are paying for. This creates a sense of accomplishment and rationalization towards where his money is being put forth to.
If you choose to instead create a savings with his deposit, it’s better to keep it secret, as it still creates the illusion that they do. When the time comes for your child to move out, you gift them the savings account which plants a seed in their head showing the importance of creating and using a savings account.
You may feel bad integrating this into you and your child’s routine, but in the long run, your child will adopt skills that will help him succeed in his future.