How to Get Your Kids to Step Off the Gravy Train

A mother and son have a serious talk while sitting next to each other on the sofa.

(Image credit: Getty Images)

By Neale Godfrey, Financial Literacy Expert

published 26 April 2024

Remember when we Baby Boomers grew up and knew that when we turned 18, we would be on our own financially? We either got a job or went off to college and basically left the nest. Of course, we went back home to visit and to sleep in our childhood bed. But we didn’t move back in.

Well, that doesn’t seem to be the case in today’s world. According to a study conducted by Savings.com, many adult children return to the “empty” nest, and almost half of all adult children rely on their parents to help them financially.

Not a walk in the park for parents

The Savings.com study also revealed that the parents helping out their grown children contribute “more than twice what the average working parent contributed to their own retirement savings monthly.” On average, parents are giving their kids about $1,384 per month, or nearly $17,000 per year. This means that parents are sacrificing their own financial security.

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Don’t worry about suffering from empty nest syndrome

You might have dreaded the day when the kids were gone and a quiet came over the house. You could have asked yourself: How will we cope with an empty nest? But you might have conversely felt satisfied that you instilled the values and life skills for your kids to enjoy their own financial independence and now could make their own life journey in the world. Your job was done; the kids were baked.

Well, fear no more. According to Pew Research, about half of adult children ages 18 to 29 had returned to the empty nest in July 2022. They seem to be only half-baked.

Did we do this to ourselves?

Many parents, and frankly schools, have not prepared kids to be financially independent. Gen Zers scored the lowest in a 2024 financial literacy study conducted by TIAA Institute and the Global Financial Literacy Excellence Center at the George Washington University School of Business. They flunked the financial test, answering only 37% of the questions correctly. Let’s not just shame that generation — all the other generations also flunked this test.

We all know that money skills are vital, but often they are neither taught in schools nor at home. This frustrated me, so I did something about it and created the topic of teaching kids about money in 1988 when I opened The First Children’s Bank and wrote The Kids’ Money Book. I later created the first money curricula for kids.

Today, only 35 states require students to take a course in personal finance to graduate; we are still not doing enough to prepare our kids for the real world.

Not so easy for our kids

But this generation of young adults have also been hit with financial hardships. They are carrying an average of $37,000 in federal student loan debt. COVID caused them to lose jobs. Inflation meant higher prices for rent, food and partying. CreditKarma reported that 32% of Zoomers (aka Gen Zers) spend half of their monthly income on housing. Their credit card debt is also mounting.

To be fair, of the adult children who are supporting themselves, 66% said that their parents did help to prepare them to be independent, according to Pew Research Center. But the majority is not prepared for their financial future. A Goldman Sachs survey found that 34% of Millennials feel behind with their retirement savings but still expect to retire between ages 60 and 64. Again, all the generations reported being behind in their accumulated savings.

The result for many adult kids: move back to Mom and Dad’s.

Hotel Mom & Dad: How to avoid the generational collision

If your grown offspring (temporarily) fails at the American Dream, we are parents, and the door is always open. You are their rock; I get it. It’s tough, because now they are adults, but they may think of themselves as children who are used to you doing all of the chores and paying for everything. You love them, but you still need to set down some guidelines so that the situation is workable and doesn’t explode.

I recommend that you have a conversation about house rules and responsibilities. I’m not being harsh; it is your house, and misunderstandings can easily take place. Expectations also need to be explicitly discussed and memorialized. That leads us to the lease.

Why draw up a lease?

The lease discussions will open up frank conversations about responsibilities. The point of a lease is to lay out rules. For instance, you may just assume that your kids will contribute to the extra expenses that you are incurring by having them back home. They may not — according to the Savings.com survey mentioned above, a whopping 61% of the adult children returning home don’t contribute to any household expenses, including rent.

Here is a brief list of questions that you, as the landlord, need to ask yourself first, then discuss with your offspring:

Should your adult child pay rent?
How much rent should your child pay?
Should the lease be for a specific time period? When do they plan on moving out?
How do you divide utilities?
What household chores are the responsibility of your child?
Is your child allowed to use your car? Who pays for gas, maintenance and insurance?
Is your child allowed to have pets? Who takes care of them?
May your child use your groceries, or do they have to shop on their own? Who makes the lists, and who pays?
Who prepares the meals?
Does your child need assistance in setting up a workable budget, taking all obligations, such as student loan debt, car expenses, health insurance, etc., into account?

The last step is to write out the lease with the mutual decisions.

You want your kids to experience financial independence, which is true financial freedom. That really is the ability to live the lifestyle they want without having to depend on anyone else … especially you.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Neale Godfrey is a New York Times No. 1 bestselling author of 27 books that empower families (and their kids and grandkids) to take charge of their financial lives. Godfrey started her journey with The Chase Manhattan Bank, joining as one of the first female executives, and later became president of The First Women's Bank and founder of The First Children's Bank. Neale pioneered the topic of "kids and money," which took off after her 13 appearances on The Oprah Winfrey Show.