Your Money

When to Kick Your Kid Out of the House, and Other Financial Lessons for Parents

By Jonathan Clements
The Wall Street Journal Online

Children are a long-term investment. But who knew it would be this long?

The tab to raise a kid in a middle-class household through age 17 is around $184,000, according to the U.S. Department of Agriculture. If the child then spends four years at a prestigious private college, you might cough up an additional $160,000.

Think the financial bleeding ends there? Think again. These days, we're talking graduate school, allowing the kids to move back home after college, covering the rent on a first apartment and maybe even buying it for them. Should parents really be forking over all this money -- and where do they draw the line?

Heading home. Like it or not, it's taking longer for adult children to become financially independent. One indication: As of 2001, almost four million 25-to-34 year olds were still living with their parents, according to a 2002 study by Harvard University's Joint Center for Housing Studies.

What's driving this trend? Many kids are taking five years to get an undergraduate degree, they're going on to graduate school, they are working as poorly paid interns, they are slow to settle on a career, and they can't afford to buy their own home because of lofty real-estate prices.

But it isn't just about the kids. Parents not only have the money and the room to keep their adult children at home, but also many enjoy having the kids around, in part because it helps them put off unsettling thoughts about their own mortality.

"There are a lot of reasons why children might still be at home in their 20s," says Jerrold Lee Shapiro, a licensed clinical psychologist and a professor of counseling psychology at Santa Clara University, Calif. "But the danger is that they never grow up."

Indeed, for parents, there's a difficult balancing act involved. Studies in Europe have found that young adults who get a lot of parental support tend to be more optimistic, more ambitious and more adventurous in their career choices, notes Terri Apter, author of "The Myth of Maturity" and a social psychologist at Cambridge University in England.

But if you provide too much support, there's a risk you will end up with an overly dependent child who has an unpleasant sense of entitlement -- and you could torpedo your own retirement plans.

Finding their feet. What to do? To help your adult children as they strive for financial independence, try these four strategies.

--Talk about your own struggles. Today, your kids likely view you as affluent and successful. In all likelihood, however, you had lean years after college, including difficulties landing a job and trouble covering the bills. Your kids will have similar struggles -- and they need to know that.

-- If your adult children ask to move home, immediately draw up a plan with your "boomerang kids." Nail down what they will do to pursue their desired career, how they might earn money in the meantime and when they will leave.

"Their job is to take steps to move into adulthood," says Cambridge's Dr. Apter. "Their job isn't to hang out and see what happens. If you've had a young, healthy adult at home after college for over three years, you have to ask, 'Is this in everybody's best interest?' "

-- Treat your adult children like adults. When they move back home, they should take on responsibilities, including paying rent, cooking and cleaning.

But this can be a little tricky. You want your kids to behave like grownups -- but you don't want to impose a slew of restrictions, effectively dealing with them as though they're children.

"What are the proper rules for your 24-year-old son?" Prof. Shapiro asks. "You have to treat him as the adult that he is and that you want him to be. You encourage independence by giving people freedom."

-- If you help your kids financially, aim to leverage your investment. "If parents have the money and they want to help, they should structure it as a partnership," advises Eileen Gallo, co-author of "The Financially Intelligent Parent" and a psychotherapist in Los Angeles. "That can empower the child."

For instance, if your children want to go to graduate school, you might insist that they take out loans to pay for at least part of the expense. That way, there's a real cost to staying in school -- and a real financial incentive to complete the degree and parlay it into a decent-paying job.

Similarly, if you initially subsidize your children's rent, you might slowly scale back the subsidy, while offering to match any home down payment dollar-for-dollar. That will have the double benefit of both weaning your kids financially and also encouraging them to sock away money for their first home purchase.

Don't, however, give your kids money you can't afford. For parents, it might seem logical to carry on as the big breadwinner for the entire family. After all, you're the one with the big salary, while your kids may be earning precious little.

But if, like many others, you have put off saving for retirement until your last 15 or 20 years in the work force, you really need to use your spare cash to fatten your own nest egg. That doesn't mean you can't be supportive of your kids. But your support may have to be more emotional than financial -- and that, in any case, is the most valuable kind.

Write to Jonathan Clements at

The Wall Street Journal Online
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