Budgeting for Boomerang Kids

More unemployed adult children are moving back in with Mom and Dad during these tough economic times, and although most parents are happy to help out emotionally and financially, some basic ground rules can help keep the peace and balance the budget (Kiplinger's October).

According to Collegegrad.com, more than three-quarters of college graduates in 2008 said they planned to move back home, up from two-thirds in 2006 (Bankrate.com June 8). The recession is only partly to blame. Faced with mounting credit card debt, steep student loan obligations, and the high cost of living in some areas, young adults wind up carrying a lot of baggage in the form of IOUs through Mom and Dad's front door.

Experts encourage parents of boomerang kids not to sacrifice their own retirement. Have an open discussion and establish ground rules from the start:

• Determine the timeframe. Make sure the arrangement is temporary by establishing how long the adult child will live in your house. "Until I find a job" may not provide sufficient incentive for some individuals to get back on their feet in a timely manner.
• Charge a modest rent. Give them some semblance of reality - even if the amount charged is half the going rate. Some parents have used the money collected as a form of forced savings for their own future expenses. Or, use the rent collected to help pay off the adult child's student loan.
• Establish house rules. Have the talk about chores, smoking, house guests, and - yes - curfew. It's your house. The more topics you cover before the suitcases are unpacked, the less likely you'll have boomerangst down the road.
• Stick with your plan. If you don't, you'll become an enabler with a financially irresponsible adult child living off you, rather than with you.