Many parents are beginning to add the title of “landlord” to their resume as the trend of college graduates moving back home grows. Graduating from college is a big adjustment for your child, but having your son or daughter move back home is also a big adjustment that brings up many questions.
One of the biggest questions that comes up in this scenario is, ‘Should I charge rent?’
Although making a child pay rent might seem unnatural, it’s certainly an option worth considering. Chances are your recent college grad fits into one of the following categories:
Just Graduated, Has A Low-Paying Job or a No-Paying Job
For many college graduates, finding a job directly out of school has proven difficult. Many decide to take unpaid internships or find lower-paying jobs to make ends meet. In this case, it is completely understandable to want to help your child out and follow through with it. If your child is struggling financially as a result of a lost job, divorce, or just not being able to find the right job, allowing them to live rent free is a helpful and supportive option.
- The important thing about this situation is to make sure it is temporary. You might want to consider setting a time limit for how long you will let your child live rent free. The limit could range from four months to six months — it is up to you — but make sure you follow through on your time limit.
- You should also decide what will happen at the end of the time limit: Are you going to ask your child to move out? Are you going to charge rent? Once again, you should always stick with your decision. Some payment options include:
- Asking your child to pay certain bills like utilities or water.
- If you decide to charge rent but your child is still struggling financially, you can negotiate a value based on their income or how much rent costs in your area.
Putting some pressure on your child to figure out his or her finances within a certain time frame could help in the long run. Recent graduates will learn to fulfill responsibilities, manage money and stick to a budget. Children who lost a job or are going through a divorce will have some time to recuperate and incentive to restructure their goals and financial plans.
Just Graduated, Has a Job, Living at Home to Save Money
Moving back home has lost a lot of the negative stigma once attached to it, making it a very appealing option for graduates. CNNMoney Magazine editor Walter Updegrave addressed the problems that could arise from allowing a child to live rent-free. Updegrave’s used an example of a fictional son: “Essentially, he would be living in a fantasy world that’s available only because you’re subsidizing him. If he remains in such a situation long enough, it could make his eventual adjustment to the real world — where people do have to pay rent or make mortgage payments and adjust other spending as a result — more difficult.”
- When trying to set a price for your child, look at the average one bedroom rent for your city and charge them that price.
- Make sure to set up a payment schedule with your child, some people opt to charge a late fee in order to mirror a real-life rent situation as closely as possible.
- It is beneficial to talk about how long your child plans to live at home in order to figure out the best results for everyone involved.
Every family faces different circumstances, meaning there is no textbook answer on to handle a child who has moved back home. The best thing you can do is set up attainable goals with your child and try to teach them to be financially independent while they are trying to figure out their next step.