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Your Adult Kids are Back. Now What?

Two of three grads return home today. Skip the you-got-it-good jokes and
get set for a new stage of parenting.

January 2007

The balancing act between teaching your kids independence and keeping them safe isn't easy. Do you let them climb to the top of the jungle gym? Are they old enough to venture into town to see a movie? What's a reasonable curfew for a teenager -- with a car? According to the parenting gurus whose books like my shelves, that's supposed to be it. Once college commences, your job is pretty much done. But boomerang kids are now so common that social scientists have dubbed the phenomenon "adultolescence", a period following college that can last five or more years. More than 65% of graduates are moving back home, compared with 53% just five years ago. And while the difficult stages of childhood may have had lasting emotional impact, this one has financial ramifications galore for you -- about $5,000 a year, on average, in assistance -- and your kid.

How did adultolescence come about? Blame rising college costs and rampant consumerism. Today the average graduate emerges with nearly $20,000 in student loans and $4,000 in credit card debt. Meanwhile, she faces a world in which rents have skyrocketed over recent decades but starting salaries, adjusted for inflation, have dropped 17%. She can't cut it, so she falls back on the Bank of Mom and Dad for support in the form of either cash or an invitation to move back home. Your challenge is to help her weather this period and come out the other side standing on her own two financial feet.

PLAN FOR IT

There are two types of adultolescence. The first is one that you and your child see coming. You both know that his starting salary as a sous-chef won't cover his expenses, so you decide he'll stay home for a couple of years and stash some cash. If this happens, it's imperative that you expect a real financial contribution from your kid, even if you don't need the money. The National Foundation for Consumer Credit suggests that a maximum of 35% of an adult's income go for housing. Bill your kid for half that and require him to do something smart with the rest.

INSIST ON ONE HANDOUT

Health insurance. If your child isn't covered at her job, make sure you don't allow her to remain uninsured. Nearly a third of 18-to-24-year-olds don't have health insurance, according to the U.S. Census Bureau, and a quarter of those who are 25 to 34 go without. Nine states have passed laws that allow you to pay extra to carry your children on your policy until age 30, and more are studying the issue.

PUT AN END TO THIS PHASE

How do you know that your days of bailing out your kids should come to an end? David Morrison, founder of TWENTYSOMETHING Inc., a market research firm that studies Gen Y, suggests monitoring your child's consumption habits. "Today's young adults are definitely spending," he says. "And it's one big reason that today's young adults have less net worth than young adults 15 to 20 years ago. I tell parents this: 'If your child is buying a better car than you or taking better trips, it's time for them to move out.'" Amen.

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