Moving out of the family home and into independent living can often be a significant achievement for your children and a noticeable pivot into their “adult life”.
But with the current cost of living crisis putting pressure on people’s expenses, it’s possible that young adults living independently will be forced to consider moving back in with their parents in order to save money.
For your children, this could be a useful way to take some of the weight off their backs. For you, on the other hand, it may add a financial load that requires careful consideration regarding the added costs of your extra tenant.
Read on to find out how your child moving back in might affect your finances, and what you could do to combat these added expenses.
The cost of living is forcing young, independently living adults to reconsider their home arrangements
Recently, research carried out by Aviva reported statistics showing that one in five independently living adults are considering moving back in with their parents to save money.
Around 2 million young adults, aged 18 to 34, could be returning to live with parents to cut expenses during the current cost of living crisis, joining the 4.8 million young adults that already do.
There are a few reasons for this:
Firstly, it seems that the cost of living has exacerbated other, pre-existing challenges to moving out of the family home that young people faced.
For example, the rise in the cost of living can make it hard for people to save money for their long-term goals. In fact, Aviva reported that 40% of young adults moving back into their parents’ home are doing so in order to save to buy their own property.
Meanwhile, 28% say they can’t afford their current area’s rental price, with 26% of people explicitly blaming the increased cost of living.
Because of these difficulties, a generation of those that have moved out of their family home now face the tough choice of whether they can afford their lifestyle.
Aviva figures also reveal that 8% of young adults they surveyed haven’t spoken to their parents about moving back with them, despite considering it. So, your child may be feeling guilt or shame in being forced into this position. In this case, relieving their apprehension could be as simple as instigating the conversation.
Before then, this blog may have valuable information that can help you and your child come to an agreement.
Even if you ask your children for rent, it doesn’t mean they aren’t saving money
During this time, one of the most difficult choices is deciding what, or even if, to charge your children to stay with you. Indeed, you may even feel like you need them to pay upkeep, and don’t have a choice at all.
It’s worth remembering that asking for help with rent is far from uncommon – Aviva figures indicate that 53% of adults living with their parents pay “bed and board” for their stay.
There is often little need in worrying about whether or not to charge your children rent as, according to Aviva, the average rent of people living with their parents is £197.
Compared to the average property rental price in the UK – which SpareRoom measured as £626 each calendar month for Q3 2022 – your children will likely save money regardless.
Even so, Aviva’s research found that 28% of parents found £197 to be too little of a contribution.
It’s clearly a tough problem to work around, especially when considering 35% of these parents have thought about increasing their child’s contribution but had yet to ask.
As a parent, this process can be difficult for you, and you may need help organising your finances in preparation for the eventuality of your child moving back in with you.
The added recurring costs may lead you to consider your own financial position
As you welcome an extra tenant into your home, other costs are likely to increase, including food and utility bills.
When factoring in how the cost of living may affect you in this situation, you may be left in an unfamiliar financial position with little spare cash to work with.
Aviva’s survey found that 12% of parents whose child moved back in with them after living independently have asked for additional contributions on top of their rent.
The added expenses of your child moving back in with you could mean you’re now unable to add to any Individual Savings Accounts (ISAs) you may have, or may force you to stop making contributions to your pension.
Similarly, if you had planned to release equity from your home by downsizing, the newfound necessity of the extra room could force you to reconsider this option.
In this case, you should consider reaching out to a financial planner. They can help you to create a detailed budget that accounts for discretionary and non-discretionary costs, helping you to properly assess your finances if you’re going to have an extra mouth to feed.
Get in touch
At Investment Sense, we can help you organise your finances and work out how the added costs of your child moving back to your home may affect your situation.
Please contact us via email firstname.lastname@example.org or call 0115 933 8433.
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.