I kind of wrote the book on adult kids moving back home. It’s called How Not to Move Back in With Your Parents: The Young Person’s Complete Guide to Financial Empowerment.
In the book, I note that moving back home is actually a smart move if you can’t find work that makes you economically independent and your family is okay with it. Parents, I don’t think it’s important to charge rent in these situations to teach your child a lesson about making their way in the world. Young adults today know plenty about how challenging it is to pay for a postsecondary education and then find a career-building job that pays decently.
There are exceptions, though. I came across one recently in a query from a retired reader with two millennial kids living at home. “We all share in the cost of groceries,” this reader wrote. “However, they do not pay for anything else and are not paying rent to us. I have to say that this is starting to wear on me, especially when I see that they are not depriving themselves of anything, such as ‘designer’ coffee, expensive clothing and electronics. These are not middle or high income earners by any stretch. Should we be charging them rent? Is it fair to them to change things up at this point?”
Yes, you should charge rent. Yes, it’s fair. But let’s not get judgey here. What a parent sees as designer coffee may be a form of socializing for the younger generation. Electronics like phones are as essential today as computers. Rather than shaming these adult kids for their spending on themselves, what about announcing a family meeting and asking them to contribute more than just grocery money?
Call it rent, a monthly top-up or whatever you like. Work out what the kids can afford and then get them to e-transfer it to you at the first of the month. If you need the money to cover household expenses, by all means use it. If not, I have heard parents say they bank or invest rent money from their adult kids and then present it back to them when they move out.
In my book, I encourage young adults moving home to raise the issue of rent themselves. Offer to pay what you can, or to substitute help around the home if you’re strapped. Waiting for your parents to get after you about money is kid stuff.
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Rob’s personal finance reading list
Her costly RRSP mistake
Financial literacy educator Kelley Keehn on how things went awry with an RRSP investment she made in her younger days. This is a good post on two counts – helpful information, and honesty. We all make mistakes with money. No one is exempt.
These reward programs are worth the most
The best bang for your buck in categories like North American flights (Aeroplan wins), free hotel stays (Marriott Bonvoy), food and food/restaurants (Tim Hortons) and lots more.
About all the money being made these days
Between hot stocks and housing, a lot of people have done very well financially in the past year or so. Read this Reddit thread to hear some voices of people who feel shut out of this success. The headline: “Anybody else just losing hope?”
What the Snoo says about you
All about a robotic bassinet that rocks even fussy babies to sleep. The Snoo costs about $1,800, which explains why it has become “yet another vehicle for judgment, anxiety and privilege” among parents.
Ask Rob
Q: Where is a good place to put $500,000 for an 85-year-old? We would like income versus growth. There is the same amount invested in stocks in an online account. Small pension, so income is important.
A: One thought is to consider an income-generating exchange-traded fund like the Vanguard Retirement Income ETF Portfolio (VRIF) or similar. But I also think a consultation with a financial planner would help in making a sound choice that serves tax and estate planning needs.
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Tweet of the week
“Small town Ontario house price insanity.”
Today’s financial tool
CNN built this explainer on how to invest in bitcoin and other cryptocurrencies. Ignore the note that there are no exchange-traded funds that invest in bitcoin – it applies only to the U.S. market. There are several Canadian crypto ETFs.
The money-free zone
A Twitter discussion on the worst candy of all time. I vote for Thrills gum.
ICYMI
- What to think about if you’re getting a ‘grey divorce’
- Can Richard and Rachel afford to retire early and still spend $100,000 a year?
- Retirement levels expected to surge after pandemic-era slump, RBC report says
More Rob Carrick and money coverage
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Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Are your parents giving you money? • Why it’s time to stop shaming the renting lifestyle • Is now the right time to buy a house? • Why are young Canadians leaving the cities they love? • Eating in: How COVID has shifted our food spending • Crisis-proof your finances • Can you afford to live downtown? • The cost of kids
- ✔️ The housing file: The housing boom is ripping apart the financial fabric of Canada • Shut out: A well-qualified millennial home seeker throws up his hands after losing multiple bidding wars • Big city housing affordability is over – now what? • She sold her Toronto house to retire somewhere cheaper, but it didn’t work • How young adults and the whole country win with a tougher mortgage stress test for home buyers • Can’t afford your house? It’s likely not your fault
- 📈 Investing: Robo-advisers have grown out of the novelty stage. Here’s help in finding one right for you • The 2021 ETF Buyer’s Guide: Best Canadian equity funds • The 2021 Globe and Mail online brokerage ranking: Who’s best for investing … and answering the phone • Are these the stock market returns of a lifetime? • On the cusp of retirement and wondering about an ETF that pushes the limits on aggressiveness
- 💰 Your money: The five most important numbers for checking the health of your personal finances • Today’s freakishly low mortgage rates can’t last. What will pandemic home buyers do when they rise? • There’s a cost in money, isolation and family stress when seniors choose to remain in their own private homes • Taking CPP early can cost you $100,000 and limit your long term options • Fleeing the city for the suburbs? Watch out for higher property taxes, more cars and other costs
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
