Outsmarting the Boomerang: Financial Independence for Adult Children in 3 Steps

By S&E | Jan 29, 2021

Did you know that as of 2014, 18 to 34-year-olds were more likely to live with their parents than with a partner or spouse? Up to 15% of young adults now live with their parents for an average stay of 3 years. Even those who hold bachelor’s degrees follow the trend.

This is the so-called boomerang effect. Many young adults try to strike out on their own by heading off to college, but can’t finance life independently. So, they return to the safety and security of their parent’s home.

Would you rather not be part of the boomerang statistics? If you’re a concerned parent who wants to see their child spread their wings and fly to financial independence, you have to be like an eagle. A mother eagle knows just how to raise her chicks so that they’ll be successful. Then, she pushes them out of the nest at the perfect time. She only steps in to save them at the very last instant before they hit the ground.

So, how can you be like the wise eagle mother? Here are some tips:

  1. Before Leaving the Nest…Get a Joint Credit Card (But Make Limits Clear)

Leaving the nest is difficult in part, because the chick hasn’t yet developed the skills they need to live on their own. In a similar way, newly adult children need to establish themselves. It can be hard for young adults to build credit that can be helpful for getting loans, buying a car, and any number of other independence-building steps. One way to get there is for parents to open a joint credit card. That way, the child can benefit from the parent’s good credit. However, the catch is that the young adult must be very responsible with the card and avoid accumulating large amounts of debt. 

  1. Fly Free with A Solid Budget

Young people must learn to set a budget and live within their means in order to truly fly on their own. Unfortunately, this topic isn’t often taught at school. It’s up to parents to set a good example. 

If you haven’t discussed it yet, make sure you sit down with your adult children and explain how you budget each month. You can start by having your child track their spending for one month. This will help them discover how much they spend on entertainment, necessities, bills, debt, etc. Then, they can identify areas where they can cut back. In addition, this exercise will give them an idea of what their ideal income would be. Luckily, there are also plenty of apps and programs that can also help young adults track their spending and identify areas where they can save.

  1. Set Expectations When Returning to the Nest

If your child does end up returning to the nest, you’ll need to set some strict ground rules. For example, some parents charge “rent”, but then save this in a separate account and give it to the child when they move out. Household arrangements such as chores, visitors, curfews, etc.  You should also consider setting a deadline for the arrangement. Or, if your child is unemployed, talk about their plans for getting a job and set specific goals such as numbers of applications submitted, etc. Finally, make a timeline for how long your child will live at home that you can both agree to. Then, when it’s time for you to send your child out to fly on their own again, it won’t come as a surprise. 

With these tips and expectations, you can help make sure your child has a smooth transition out of your nest and into adulthood. Flying on their own, your child will soon achieve their financial independence. 

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