Boomerang kids, boomerang budgets

October 29, 2010

Christina Newberry is pictured in this undated handout photo. REUTERS/HandoutWhen Christina Newberry first moved back in with her parents, she was a 21-year-old recent college grad. Eight years later, she found herself back on her parents’ doorstep after the breakup of a long-term relationship.

Newberry is one of the thousands of young, and not-so-young, adults who make up the boomerang generation – adult children forced to cohabitate with their parents because of a lack of financial independence.

Statistics show fewer young adults are able to live on their own. Among 18-to-34-year-olds, 10 percent say the recession has forced them to live with their parents, a 2009 Pew Research Center study found.

“The economy has a lot to do with it,” says Newberry, author of  The Hands-On Guide to Surviving Adult Children Living at Home. “Financial struggles are one of the main reasons why children move back in with their parents and it’s just realistically harder these days to find a job, especially right out of college, and a job where you can support yourself and get your own household established,” she says.

An estimated 37 percent of 18-29-year-olds are either unemployed or out of the workforce – the highest percentage of this age group in nearly three decades, a 2010 Pew Research Center analysis of Bureau of Labor Statistics data found.

Sky-high student debt and minimal job opportunities create a perfect storm for young adults, and will force an estimated 85 percent to return home this year after graduation, according to projections from Twentysomething Inc., a young adult consulting firm.

“We’re seeing people in their 20s and even 30s moving back home sometimes for extended stays,” says David Morrison, managing director and founding partner of Twentysomething Inc. “That’s a new development with the current economy, we’ve not seen that in past recessions and that’s a trend that is certainly on the increase right now.”

With statistics like that, what parent wouldn’t want to help? But before you welcome your son or daughter with open arms, there are a few things you can do to ensure a positive experience all around.

Budget together
Turning your empty nest into your adult child’s crash pad means readjusting your budget in a number of areas. Added grocery, electricity, heating and insurance costs need to be factored in to a new monthly plan.

“There’s a misconception from the adult children’s side, and sometimes from the parent’s side as well, that it’s free to have the adult child come and live at home as long as the room is there and available. That’s just not true,” Newberry says.

Include the adult child in the budget-making process to illustrate just how much of a financial impact their presence will have. The budget talk is also a good opportunity to project future expenses when the child eventually moves out on their own.

“They may have no idea how much it costs to run a house, how much the electrical bill is, how much rent is, how much food can cost you. Sit down with them and show them what their budget is going to be when they move out on their own so they can work towards that,” says Erin Baehr, a financial advisor with Baehr Family Financial.

Negotiate
Is it appropriate to ask your child to cover some expenses? Whether it’s rent or a cellphone bill, the added pressure will likely motivate the child to look for gainful employment sooner and will get them Brian Ludwig and his mother Erin Baehr are picture in this undated handout photo. REUTERS/Handoutin the habit of saving for monthly expenditures, says Baehr, whose own son Brian recently moved back home after graduating college.

Baehr negotiated a grace period with her son where she and her husband foot the bill for expenses directly related to him, like his car insurance, for the first few months of cohabitation.

“In past years families would live together and pool their resources. I know my Dad had to turn over his pay checks to his parents when he was in high school to pay the bills. If you need that money than don’t feel guilty about asking them to pitch in,” she says. “On the other hand, if you don’t need it then it’s still a good idea to charge them a reasonable amount of rent to teach them, and get them practicing paying their bills. You can hide it away some place and give it back to them when they’re ready to move out so they have a little nest egg.”

Even if your child is willing to pay for bills, job prospects for the class of 2010 are increasingly bleak. Unemployment levels are the highest they’ve been in a generation and unemployment rates for college grads younger than 25 are nearly double their pre-recession levels, according to the Economic Policy Institute.

If your child is having a rough go on the job front and can’t contribute monetarily, there are other ways to ensure they earn their keep.

“In some cases the child has no money whatsoever, and in those cases, the parent and the child should work out some kind of agreement where the adult child is contributing their manual labor instead of dollars. There should still be a set rent that they work off every month,” Newberry suggests.

Teach financial stewardship
The economy will eventually turn around, so use this time to help the child become established as an independent person.

“Kids don’t even understand the concept of a paper checkbook anymore,” Baehr says. “They just look online. They have no recordkeeping system, and it’s really easy to lose track of what you’re spending. Where did my money go? Why am I overdrawn? How did that happen?”

Listen to your child’s problems and concerns and relay your own personal experiences. Refrain from judgment and recognize your children are establishing themselves in a much different world than when you were trying to make it on your own.

9 comments

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[...] You can read the whole article on Reuters.com here. [...]

[...] millions of young adults to move back in with Mom and Dad. Boomerang kids mean boomerang budgets. Deep Pocket This entry was posted in Global News and tagged Boomerang, budgets, Kids. Bookmark the permalink. [...]

Now we see the true meaning of the sly, catchy phrase that we shall “bear any burden, pay any price” so that the foreign policy goals of a well-off generation that is mostly already dead can be met.

Who needs a middle class? Who needs a career? Or even a job? What we need is to WIN the War on _____ (fill in the blank with any of a dozen choices). Most recently Arabs and Muslims, but with also rans of dopers, sex-fiends, drunkards, wife abusers, sexists, racists, discrimination, whites, foreigners, Mexicans, criminals from lower classes, and more. Many more.

Are you not proud of what you have sacrificed your children’s future for??

Posted by txgadfly | Report as abusive

1990: To Get a Great Job You Need a Good Education

1995: To Get a Good Job You Need a Good Education

2005: To Get a Job You Get a Good Education

2010: You’re Lucky to Have a Job but Education Helps.

2015: Headline: “Janitorial Position Requires Ph.D – 5,000 applicants show up.”

Posted by GLK | Report as abusive

It’s not just the economy. Housing costs are insane. During the housing boom there was no real apartment building. Affordable housing programs are typically not available to college grads; they usually make enough to not be considered poor but pay out so much of their paychecks to college loans that they cannot afford a place of their own.

Posted by anarcurt | Report as abusive

Most people I know who don’t have a job are a) too lazy to work or b) were too lazy at work. If you’re not included in that bunch you won’t take offense to this. There’s a real ‘move back home generation’ of 20/30 somethings that doesn’t understand that you have to work to make money and you can’t show up and surf the internet all day. I fired 3 or 4 of the deadbeats last year.

Posted by somethingtosay | Report as abusive

They voted for Obama in droves and now the chickens have come home to roost.

It is true that schadenfreude is an unpleasant emotion, but I can’t help it.

Posted by eleno | Report as abusive

After a failed marriage, I lived with my parents from 1980 to the late 1990′s before finding a high paying position that afforded me a house, car, and some stability. I just knew that if I tried to make it during the 1980′s and 1990′s, with a stock market crash following a major recession in the 1980′s (and difficult recovery in the early 1990′s) that I would boomerang, so I called a spade a spade and stayed put with my semi-wealthy parents.

When I bought the house in my late 30′s, which I continue to own today, it was a religious “Hallalujah” type of experience. Almost two decades of unhappiness was rewarded with freedom.

The past 30 years started with a terrible recession in the early 1980′s, a few years of euphoria (false light at end of tunnel syndrom) in the mid 1980′s, a brutal stock market crash in 1987, an economy devastating earthquake in 1989, a few years of stagflation in the early 1990′s, false euphoria of a “dot-com boom” in the late 1990′s, brief flirt with respectable six figure income in the early 2000′s, flirt with real estate riches in the mid 2000′s, and complete financial ruin in the late 2000′s.

Now I’m riding on a floatilla of Obamafication and relief from bankruptcy, and the epiphany of discovering that with a six figure income after bankruptcy (who would have thunk?) that I’m going cold turkey from high credit-limit plastic! And I love it, true freedom. Slap the VISA logo on a debit card and who needs any other plastic? Relief from six figure debt, guilt free (since it’s your right as a U.S. citizen to relief in bankruptcy; the banks aren’t the only ones who are entitled to debt relief!).

The thought of more debt makes me want to puke. Hopefully I’m cured of the debt disease that turned me into a debt eating zombie. I’m like the cured zombie on that British horror flick “28 Days Later” that was cured.

Living with parents exacts a terrible toll but in this day and age, it’s a necessary evil to obtain the objective of financial independence later in life.

Posted by DisgustedReader | Report as abusive

I suppose the boomerange kids (really adults) can also be attributed to parents who hovered and doted on them until a new term was born: Helicopter parents (you know, everyone gets a trophy, scores aren’t kept, EVERYONE’S A WINNER!!)

Now these kids/young adults don’t know what it is to be broke, work a job that they deem “beneath” their little college degrees and want the lifestyle their parents money afforded them! WOWOWOW! Wake up parents! No one ever died from being broke, in fact, it’s a very good way to WAKE THEM UP FROM THEIR FAIRY TALE EXISTENCE! It’s hard out in the real world. Effort is required! Their little “I deserve this” attitude falls by the wayside and guess what? THEY GROW UP!

Quit inventing your own welfare system! Surely you raised them better than this!

Posted by workergal | Report as abusive

start imposing tariffs on imported finished goods and the manufacturing jobs will come back. From there the wealth will spread again. In doing so u will also balance some of the deficit. simple.

Posted by robb1 | Report as abusive

Ashleigh,

This article on lifestyle segment is very good, effects of recession on Generation Y, this link i found here is very helpful to get a meaningful prespective of the situation on the ground and its complexity http://www.epi.org/
and
http://epi.3cdn.net/bf2c1bd6ad4b54f216_g am6ii89y

personally my dad taught me to write down all checks issued, when i try to reconcile quarterly electronic statements i have a tough time recalling transactions.

Arvind Pereira
http://www.ArvindLeoPereira.co.nr

Posted by pereiraarvindin | Report as abusive

[...] kid who got laid off and can’t find another job? Congratulations! You’re part of a majority. Sky-high student debt and minimal job opportunities create a perfect storm for young adults, and [...]

[...] stumbled across this blog, Boomerang kids, boomerang budgets, on Reuters.com and found two statistics that really show an increasing trend. It is no longer a [...]

[...] and high-school graduates is continuing to drive young adults back into the households onto the payrolls of their parents, a variety of surveys have [...]

[...] These boomerang kids get a lot of flack, and rightly so in some respects. But as they’re forced to grow and change, so too should the companies hiring them. “I try to tell people who are my age [50]that wishing someone is like you is a terrible strategy. That’s called hope and it’s wonderful but hope is not a strategy,” says Wynn. “If they were like you, than they couldn’t be better than you and for evolution to move forward, we need to have people who are better than we are. A 25-year-old is going to have a better idea. Not next week, but soon.” « Previous Post [...]

[...] These boomerang kids get a lot of flack, and rightly so in some respects. But as they’re forced to grow and change, so too should the companies hiring them. “I try to tell people who are my age [50]that wishing someone is like you is a terrible strategy. That’s called hope and it’s wonderful but hope is not a strategy,” says Wynn. “If they were like you, than they couldn’t be better than you and for evolution to move forward, we need to have people who are better than we are. A 25-year-old is going to have a better idea. Not next week, but soon.” « Previous Post Next Post » Comments 17 comments so far | Comments RSS Oct 3, 20113:44 am EDT [...]