Are adult kids living at home affecting your financial fitness?

Share

Generation Y is more likely to be living at home with their parents than any other previous generation at the same age. Almost a third of people aged 18-34 live in the parental home – a figure up from one in five in the 1970s.

If you do manage to shoo them out of the nest, almost half will return at least once before their 35th birthday.

ABS data confirms the main reason young people struggle to find the independence previous generations jumped at is affordability. Faced with higher living costs, house prices up to 12 times annual income and large HECS debts, today’s 20-somethings are under significant financial pressure.

When living at home often means rent-free accommodation, food on the table and bills paid… well, independence can be a small price to pay.

The $35,000 problem

The cost to parents is much higher.

If you have a Generation Y child, you’re probably in your 50s or 60s. In the past, you would have been preparing for retirement at this age – perhaps using any extra income to boost your super or build your investment portfolio. But if your child is still living at home, a good portion of that money goes to them – their share of food and utilities, maybe even their private health insurance.

The actual cost differs from family to family, but a 2013 report from AMP revealed that in a middle-income family, an 18-24 year old living at home costs their parents an average of $678 per week – or more than $35,000 a year.

That drain on your disposable income affects every aspect of your financial fitness – taking away your control over your finances, affecting your ability to absorb a financial shock, limiting your freedom to use your money to do the things you want to do and – here’s the big one – putting a serious strain on your retirement plans.

What can you do?

It might look like you’re the ones drawing the short straw, but kids also miss out on valuable lessons – from budgeting to navigating the rental market to share house negotiations – when they spend their 20s living under Mum and Dad’s roof.

Tough as standing on their own two feet might seem, it’s important your adult children can see that relying on you hurts everyone involved.

Talk it over with them. There’s a good chance they haven’t thought of the real impact of the situation. If you want to help them make the switch to independent living, try having them pay board, giving them a set amount of time to get some savings together before moving out, or sending them on their way with a small sum for setting themselves up. Then, it’s time to let them go.

Whether you’re transitioning to retirement or transitioning to independence, a financial plan will help you make sound decisions and reach your goals. Sign up for free to Map My Plan, which helps you build your own plan and take charge of your money.

Get your finances back on track Create a free account on Map My Plan today


A roadmap before investment journey

There are now more automated investment providers on the market than ever, targeting the 80% of Australians who are not seeking advices from financial planners. Whilst a good tool to have for first time investors, most of these ‘robo-advisors’ tend t

read more >

Gen Y housing affordability concerns can be ignored for only so long

Late last week the Turnbull Government-dominated Parliamentary Economics Committee released its report on housing affordability. Rather than reforming negative gearing or other demand side drivers, the Report suggests the housing affordability proble

read more >

2016 Financial Fitness Report

Personal finance issues are the leading cause of stress in Australia, and financial wellbeing is recognised as an integral part of overall wellbeing. Yet, to date, very little research has been done in Australia to measure the state of our financial

read more >

What’s the new story with super?

Its been said there are two certainties in life: death and taxes. The government's federal budget introduces a third: changes to super

read more >

Time for a rich list reality check

The web is full of blogs and articles telling you how to get rich through the stock market. Investor strategies, new apps to invest your spare change, online investment platforms...

read more >