Personal finance tips: Our son moved home but is struggling to find work. What rules should we set?

Peter Dunn
 |  Special to USA TODAY
5 student loan tips for recent gradsIf you feel like you’re never going to get out from underneath your student loan debt, these five things could help you make a game planDear Pete, When my son graduated from college in May, his mother and I told him he could live with us through the end of 2020 while he got on his feet. As you might have guessed, he’s struggled to find steady employment, and he’s not exactly on his feet, financially speaking, right now. We’re obviously going to allow him to stay, but I’m still trying to establish some parameters which will keep him headed in the right direction. He does have some income, and his student loan grace period is ending soon so that income will go quickly. Any ideas? Answer: Of all the columns I’ve ever written for USA TODAY, the one I wrote regarding the important tough love a parent can instill by putting limits on adult children living with them, received the greatest response. And by great, I mean measured in the volume of responses.Living in the same home as an adult child can be as simple or as complicated as you make it, but there are several ways it can go wrong quickly. To begin with, there’s nothing fundamentally wrong if both you and your son want to live under the same roof. That determination is absolutely none of my business. But if you both feel that way, along with your wife, you are likely the exception to the rule. From what I’ve witnessed professionally, there’s always at least one party who isn’t all-in on the multigenerational household idea.  Lack of structure hurtsWhat exacerbates these feelings is the lack of structure which often accompanies a well-intentioned, and often pragmatic, decision to live in the same home in the first place. Fortunately for you, Robert, I sense you understand this and want to make the most of a tough situation.  The best way to create structure is to sit down and discuss your son’s financial goals, as it relates to his time in your home. If he’s like most 22- to 23-year-olds, it’s unlikely he’s ever done this before. In fact, simply asking him his “financial goals” may prevent a really good conversation from taking place.Cutting the cord: How to wean grown kids off your payroll, freeing up more retirement cashDownsizing guide: It makes financial sense to downsize your home as you prepare for retirement. Here’s why.What’s his ideal lifestyle in 3 yearsAsk him to work backward from his ideal career and lifestyle scenario three years from now. From that, you should have an idea of what his income goals are, and you’ll begin to understand whether he’s trying to replicate the lifestyle you provided for him as a young adult student, or if he realizes his relative (to your) financial insecurity will produce a more modest lifestyle.  Together, you should calculate the cost of that lifestyle, and what sort of income supports that lifestyle. Assuming he has a realistic expectation of income, you’ll know he can’t move out until he earns that income. Don’t forget, that income also needs to support his student loan payment, long-term retirement contributions (I recommend 12% of gross income for new grads), and short term savings as well. Knowing what income justifies him moving out is a great way to stay on the same page as each other.  Secure a job then stay a bit longerThe most important part of this plan comes when he’s able to secure his full-time job and earn the income he needs to make this whole plan work. Instead of sending him on his merry way as quickly as possible, consider having him stay with you two to three additional months. This will allow him to top off his emergency fund, and theoretically launch him for good.  Until he does move out though, do your best to make sure he doesn’t waste the opportunity of having low living expenses by increasing his discretionary spending. Ideally, he should handle his own expenses such as data plan and food, but you don’t necessarily have to charge him rent. Encourage him to save as much money as possible now, and you can even transparently frame it as an opportunity for him to be able to afford to furnish his new place, once he finally moves out.  The more honest and structured you make this arrangement, the more likely it is to work-out best for both of you. The looser the rules get, the worse the outcome. Good luck.Peter Dunn is an author, speaker and radio host, and he has a free podcast: “Million Dollar Plan.” Have a question for Pete the Planner? Email him at AskPete@petetheplanner.com. The views and opinions expressed in this column are the author’s and do not necessarily reflect those of USA TODAY.

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