A Publication of WTVP

Remember that tearful goodbye to your child after moving them into their freshman dorm not so long ago? Just because your child is all grown up doesn’t necessarily mean they’re out of the nest for good. In fact, having an adult child return home is more common than you think.

According to a recent Pew study, adults ages 18 to 34 were slightly more likely to live at home in 2014 than any other living arrangement. Student debt, high cost of living and entry level salaries are just a few of the factors that may bring your adult child knocking on the front door, suitcases in tow.

Having a boomerang child at home can present financial challenges and opportunities for both parents and the child. The following tips can help keep finances on track while fostering a positive experience for all.

Plan for the Unexpected
When developing a financial plan for retirement, many boomerang parents don’t take into account their adult children returning to the nest. With people living longer than ever, retirement funds must also last longer. Substantial unexpected expenses—such as having to support a boomerang child—may jeopardize the sustainability and longevity of those hard-earned retirement assets.

You can help account for these types of unplanned expenses by building contingency buckets into your overarching financial plan. Money that is specifically set aside for unexpected expenses should be allocated to these buckets, which can help ease the burden on credit or other financial assets down the road.

Discuss and Set Realistic Expectations
Having a meaningful conversation should be among the first orders of business. It can be difficult for parents to draw the line between how much to provide for their boomerang child and how much to expect in return. Stipulating financial contributions is a good start, regardless of the amount. Whether this means paying a portion of rent, car insurance, groceries or the cellphone bill, putting your child in charge of some weekly or monthly payments fosters sound money management skills. Make sure to reinforce the importance of saving, which helps build financial security.

Setting realistic expectations for how long your boomerang child can live at home or specifying fiscal and household responsibilities helps to keep everyone on the same page—and is likely to prove beneficial in the future.

Emphasize Financial Goals
Striving to reach financial goals is important for both boomerang parents and children. Parents should make it a point to not only update their budget to reflect the presence of a boomerang child, but also stick with it.

Boomerang children should set short, medium and long-term financial goals such as contributing financially, finding an internship or job, and ultimately saving enough to move out on their own. Setting and achieving financial goals is a large part of gaining and maintaining financial confidence. This confidence is key for both parents who may be struggling to adjust and preserve their finances, and for boomerang children who are working to achieve some degree of financial independence.

Don’t take it for granted
The opportunity to live at home as a young adult should not be undervalued. It’s an incredible chance to build a savings that would otherwise be allocated towards rent, groceries and utility bills. Additionally, children should use the time at home to take and apply financial advice from parents, as they generally have a heightened understanding of both financial opportunities and financial obstacles that may present themselves.

And boomerang children should remember: it’s okay to live at home. Using the time as an opportunity to learn and grow can help children develop skills to be more prepared and financially-ready to conquer the challenges of adult life following a few extra years in the nest. iBi

Patricia Cutilletta is an Executive Director and Financial Advisor with the Wealth Management Division of Morgan Stanley in Chicago.