BOOMERANG-ING--50% OF COLLEGE GRADS MOVING BACK IN WITH MOM & DAD
What is boomeranging?
Boomeranging is the growing trend of adult children coming back home to live with parents after college, after a marriage breaks up, or after a financial set-back.
Why are more new college grads moving home after college? And what about kids in their 20s who lived on their own after college and are now moving home to save money on rent and other life expenses?
The number one reason college grads are moving home is financial--caused by soaring rents, credit card debt, student loans, rising cost of living, and layoffs combined with a tight job market.
Another reason college grads move back home is because they cannot achieve the standard of living they enjoyed when residing with their parents. Their parents have nice homes, eat fine food, have media centers, pools, and the service is free!
Is the current job market to blame or is it something more than that?
Today's 20-somethings and young 30-somethings are what I call the entitlement generation--that is, they have grown up with parents who provided everything to them, and many never learned the skills necessary to support themselves, live within a budget, manage money wisely, or live frugally.
How does this impact the parent/child relationship when the children are no longer underage children or college students but young adults with jobs and their own lives?
Boomeranging back home causes conflict and tension unless both parents and kid come up with a contract outlining the kid's obligation vis-à-vis chores, rent, guests, behavior, and a timeline or deadline for moving out.
Some parents are opting to support their kids financially rather than have them move back into the home. Is this wise or is it better to allow them to move back home for a period of time?
Some widowed parents or elderly parents with health issues find the help and company of an adult child to be helpful and beneficial--especially when the situation is handled with a contract that outlines expectations.
When parents opt to support kids to keep them from moving back home, they need to do so with a contract: perhaps treating the money as a loan with a timeline for payback, or financial support attached to a condition (such as "we will pay half of your rent as long as you keep your current job").
How can parents help their kids deal with money issues and finding and keeping the right job?
Help kids be financially literate and practice financial moderation. That means opening a checking account, using a debit card instead of credit card, buying a used car, creating a budget and sticking to it, and putting aside money every month into savings.
Parents can help kids in their job search by encouraging them to set career goals, identify what their skills and interests are, and treating the job search as a serious job. That means browsing career sites for ideas, joining career chat groups, attending job fairs, tapping into the expertise of family, friends, and professors, talking to people in their field of interest, and making phone calls, sending emails, or scheduling/going on a job interview every day.
Parents can also teach children a "value system," which involves "paying their dues" so they can work up to a good standard of living; deferring instant gratification; understanding that leisure time is earned with hard work; and teaching them to stay at jobs even if there seems to be something better out there.
Soundbites:
In my survey of hundreds of college students and recent grads for my book, No More Ramen, I found that 20-somethings are woefully unprepared for the real world--in terms of money management, job hunting skills, and job keeping skills.
Generation Y--today's 20-somethings--are more attached to their parents, and often have immature attitudes about work, bosses, wealth, and job responsibilities that hinder their ability to build a strong résumé and develop a comprehensive skill set in a specific field.
More adult children than ever before are living with their parents--and that includes married, professional, men and women, singles and marrieds, new grads, seasoned professionals, and many who never even left.
The economy is the main culprit--unaffordable rent and mortgages, school loan and other debt combined with layoffs and a tight job market.
It's not wrong for parents to let kids move back home--as long as both parties mutually agree to a contract laying out conditions.
Parents need to include in that contract a timeline for the child moving out.
Kids who are taught how to be smart with money are better prepared for the real world than those who do not learn how to manage money wisely.
Losing a job--or being unable to find the perfect one--is no excuse for doing nothing. Parents with an unemployed kid living at home need to encourage their kid to do housework and engage aggressively and creatively in job hunting.
Relevant statistics:
· FACT: Since 1970, the number of boomerangers ages 25-34 living in a parent's home has ballooned more than 50 percent, to 39 million, according to a University of Michigan study.
· FACT: The median household income for adults ages 25 to 34 has risen only 7% over the past five years, yet the nation's median home price has jumped 48%, according to Census data.
· FACT: A Pew Research Center survey found almost half (42%) of 18- to 29-year-olds had trouble paying mortgage or rent last year, and 49% had trouble paying for medical care.
· FACT: 1 out of 5 people laid off last year (21%) was between 18 and 29, according to Pew Research Center.
· FACT: All told, a 2007 survey by Ameriprise Financial found about 9 out of 10 parents give money to their grown children for major expenses such as credit card balances, car insurance, and student loans.
· FACT: According to a Pew Research Center, 17% of parents whose only children are ages 18 and older were providing regular financial assistance to at least one such child.
· FACT: A recent AARP survey found that a quarter of those aged 28 to 39 receive monetary assistance from family and friends.
