Adult children living at home: the best ways to handle your finances

Updated on 27 July 2017 | 1 Comment

Having your adult children living at home is great for some extra company, but it can put a real strain on your savings. Should you allow them back at all?

The number of adults aged 25-34 living at home with their parents has risen 37% in the past 10 years, up to 1.23 million.

Among these 20-somethings and 30-somethings still tucked up in their childhood beds are hundreds of thousands who left home years ago, but somehow found themselves back where they started.

There are plenty of good reasons for young adults to consider the move; there are also good reasons why their parents should think twice before offering.

The ‘boomerang’ generation is the result of a combination of forces. Young adults have more outgoings than previous generations, partly because of the introduction of university tuition fees and student loans.

Matt Sanders, from Money, points out that: “Young people are more likely to stay in full-time education than previous generations, and while they benefit from a university education, tuition fees mean they are saddled with more debt.”

Debt repayments give them less to live on, and make moving out more difficult.

A very different home ownership experience

For those who want to get on the housing ladder, life is even harder.

Sanders adds: “Over the last decade or so, house prices have risen, as have the size of mortgage deposits lenders require – however, wages have remained relatively static. As a result, millennials’ experience with home ownership has been very different to previous generations.”

 Between 2011 and 2016, rents rose 14% - and even when you exclude the distorting effect of London rents, they were up 10%.

 A study by Aviva asked young people when they expected to be able to afford their first home of their own, and the average age they picked was 31.

While outgoings have increased, wages have stagnated. According to the TUC, they are lower in real terms than they were nine years ago. This is particularly painful for younger workers, who tend to earn less than their older counterparts.

Recent research by found that the average wage for a 20-something man is £1,924 a month. This compares to an average of £2,830 for a man in his 40s. As a result, research by Aviva found that 62% of adult children say they cannot afford to move out, while 48% say they live with family to save money.

Relationships are also increasingly likely to break down, forcing more children back home. The number of cohabiting couples who split up isn’t tracked regularly, but a study in 2011 found that couples who were cohabiting in 1989 had a 26% chance of splitting up a decade later.

Those who were cohabiting in 1999 had a 38% chance of splitting up within ten years. Last year insurer Churchill Home Insurance calculated that 7.2 million adults return to the family home after a break up, separation or divorce.

And the reasons don’t stop there: housing is a complicated business and anyone can find themselves with a gap at some point, which they fill with a stint in the family home.

Needs must

Francesca de Franco, founder of, for example, spent a year living with her father, five years ago. She explains: “I was living in a two-bedroom cottage with my husband and daughter, when I discovered I was having twins.

We put the house on the market immediately, but as my due date approached and we hadn’t sold or found anywhere to buy, my dad suggested we all move in with him.” She explains that as they are of Italian descent, living with family is culturally much less unusual.

He had quite a houseful at the time, and her father ended up sleeping on a sofa bed in the dining room to make space, but it worked very well.

Francesca, now 38, says: “My dad was working part-time, so he helped me out with my newborn twins and my two-and-a-half-year-old. It was nice that at a time when we were so busy as parents, we had the chance to be parented too.” Her father, meanwhile, enjoyed the chance to be a hands-on grandparent.

The couple sold their property, but didn’t buy their new home in Banstead until the hectic newborn phase was over. They contributed to the household financially, but even then, not needing to pay a mortgage meant they saved vital funds to cover the cost of moving, and some of the expenses of having such young twins.

Need to put some cash away? Compare savings accounts and ISAs with loveMONEY

When things go wrong

 Moving back with their parents works well for many of the adult offspring in the Aviva survey. It found that 47% of them are ‘very happy’ with the arrangement, and just 16% were unhappy. Some 24% added that they liked being looked after.

It’s hardly surprising that they’re happy. In many cases, there’s every chance that their family home is far nicer than anything they could afford themselves. There’s always food in the kitchen, plenty of heating and Wi-Fi on-demand, and there’s no cooking, washing or cleaning to worry about.

Meanwhile, according to a survey by First Direct, only 18% of them are expected to contribute anything to household expenses.

By not having to pay their own way, they can also afford a nice lifestyle. The Office for National Statistics found that adults under the age of 24 who live with parents are almost twice as likely to be financially comfortable as their more independent counterparts. Some 72% who lived with parents said they were comfortable - compared to just 44% of those who rented their own place.

For parents like Francesca’s father, the arrangement works well from their perspective too. But this isn’t always the case. For every parent who is glad to have their children around, there are plenty more who imagined life in their 50s and 60s would be less arduous. More to the point, they probably thought it would be much cheaper too.

A strain on parents

The Scottish Widows think tank, the Centre for the Modern Family, looked into this a few years ago. It found that parents with adult children living under their roof are spending £1,200 more than their ‘empty nester’ counterparts each year on everyday household expenditure.

Full nesters are making greater financial sacrifices than empty nesters across the board, with some putting their own financial future at risk. One in three have cut spending on vital items such as groceries, compared to one in five empty nesters, while 16% have needed to take out a loan, spent on credit cards, or gone overdrawn, against 7% of empty nesters.

A third of full nesters report they are contributing less to their savings, while more than one in four are spending their savings to meet the cost of everyday living.

Should you let the kids come home?

For any parent in this position, it’s worth assessing whether their child’s good reasons for staying at home have become bad ones. If they are saving less, borrowing more, or eating into their savings – while their children spend every penny they earn on having fun – there’s a good chance they’re interested in addressing the imbalance.

Parents don’t need to throw their children out. In fact, this can backfire and become an even more expensive option.

If children continue to try to live the lifestyle they are used to, whilst covering the cost of a home of their own, they can easily run into financial difficulty. For the Bank of Mum and Dad, bailing them out at this point is going to cost far more than having them occupy the spare room for a year or so.

Instead, they can help focus their minds. If young adults are ever going to move out, this needs to be something they are planning and saving for. This may mean, for example, setting up a Lifetime ISA to save for a house deposit, or other savings to cover a rental deposit.

Parents can also help teach their offspring how to live within their means. They can do them an enormous favour by making them pay their way at home, and contribute to the bills as well as stumping up a sum for rent. This is likely to force them into some major compromises on their lifestyle for a few years.

They’re not going to be particularly keen, but surely it’s better for them to learn about budgeting in an environment when the worst case scenario is that they fail to pay their parents for a month – rather than missing their rent or bills.

Parents then have the choice of whether they put aside these financial contributions into savings for their children, spend them on the additional costs of running a fuller household, or save for their own retirement.

It may feel less than generous to ask. However, every parent and child will have to swap roles eventually. Every child will have to switch from being a drain on their parents’ resources, to being someone they can call on for help in old age.

The sooner this switch happens, the longer everyone has to prepare, and the less chance their offspring will find themselves facing the bleak prospect of funding their parent’s retirement at the point when they want to start a family of their own.

You can still protect your family should the worst happen – compare life insurance quotes with loveMONEY today

More on family finance:

5 vital conversations you need to have with your parents

Is building an inheritance actually bad for your kids?

Why is childcare such as rip-off?


Be the first to comment

Do you want to comment on this article? You need to be signed in for this feature

Copyright © All rights reserved.