Budgeting and Saving

Two key parts of money management to help you achieve financial success.

Should Working, Adult Children Who Live at Home Pay Rent?

By Kevin Sun

There are many reasons why it’s a bad idea to financially bail out your adult children when they’re already working, but things are a bit more complicated when it comes to living at home rent-free. Children who are used to the comforts of their family home might expect the same comforts in adulthood, even if they can’t yet afford what you took years or decades to build. Yet letting them live at your home for free comes at a great cost to everyone.

Here are 4 points to consider when deciding if and how you should charge your adult children rent:

Paying Rent Helps Both Your and Your Adult Children’s Finances in the Long Run

Moms and Dads often underestimate how much it costs them when they allow their kids to live at home rent-free into their 20s, 30s, and beyond. Many times they’re forced to put their own plans on hold, or they risk jeopardizing their retirement because they’re in debt. 

The fact is that if you’re in financial trouble, you can’t afford to let anyone stay in your home for free – even your sons and daughters. After all, you can’t support them if you can’t support yourself.

It’s obvious why getting rent money helps parents, but what’s often overlooked is that in the long run, paying rent helps adult children too. If you already have enough money, you might feel that being your children’s financial support pillar is the right thing to do. However, all adults eventually need to be responsible for their own living costs. You can’t stop that from happening, but you can help prepare your children for it by getting them to pay rent. This will teach them to be responsible for their own financial wellbeing so that when you’re eventually no longer with them, they’ll still be able to take care of themselves.

Why Messing Up Financially Might Be Good for Your Adult Kids

Family of five people eating breakfast at kitchen table

Even If Your Adult Children Need to Save, You Can’t Always Control Their Spending

If you’re financially stable and your adult children are saving for a big purchase like a home, then letting them live rent-free so they can save faster might be a good idea. However, this requires a lot of either control or trust from you. If you control their finances and force them to save, then they’re not learning how to spend wisely and could run into trouble later. If you trust them, then you’re accepting the risk that they might take advantage of your kindness or make decisions you don’t agree with.

One way to get around this is to still charge them rent, save that money yourself, and then give it back to them as a gift when they’re ready to make the big purchase (and move out). Even if money will go back to them in the end, be strict about collecting rent so that they take it seriously too. A rental contract, just as you’d do with a stranger, will make your expectations clear. You may also not want to tell them your plans to gift any rent money back to them. Keep in mind that as adults, your children might bring partners or spouses into the picture who may influence their financial choices or even put an additional burden on you with poor spending habits. Be clear with your boundaries so that they don’t accidentally overstep them.

Transition Plans Work Better than All-or-Nothing

Rather than go straight from free housing to demanding market rates, consider easing your adult children into paying rent by starting lower and building up. This will give them time to fix their budget so that when you do start charging full price, they’re not making bad financial decisions just to pay you. How your transition plan works will depend on you and your family, but make sure that expectations are crystal clear on both sides.

As with most things, there can be room for negotiation when discussing the plan. Your kids will be much happier with paying rent if they feel like they had a part in deciding how they’ll do it. However, make sure you’re not taking advantage of each other. Just like good fences make good neighbours, clear expectations make for smoother relationships.

For Families, Rent Can Come in Many Forms

When you live in a stranger’s property, you pay rent by giving money and that’s usually the end of it. But how rent is paid when living with family can be much more flexible. The most common example is to have the children cover a part of household costs such as food and utilities. They could also do chores and other work for you to lower or replace their rent costs. This works especially well for children who are still in school or just entering the workforce.

For cultures where multi-generational living is common or expected, this can also be a great way to make sure everyone is chipping in their fair share. Even if this isn’t your household culture, splitting costs or housework could help your family feel more like a team and less like strangers. A combination of directly paying rent money and paying rent in other ways might help you and your adult children reach a happy medium. Just be sure to track all of your household expenses so that it’s clear exactly how much your kids are contributing.

Worried About Your or Your Adult Children’s Finances? We’re Here to Help

In these tough times, it’s hard for young and old alike to keep up with their costs. Both you and your children can achieve financial well-being, and if you need help, we’re here for you. Call us toll-free at 1-888-527-8999send us an email, or chat anonymously to get started. One of our credit counsellors would be happy to answer your questions and help you find solutions in a free and confidential appointment. Knowing your finances are taken care of will help give everyone in your family peace of mind.

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  1. Michael Scott

    Is there a difference between paying some of the monthly expenses and paying rent? My brother and his wife live with our father. My father pays for 1/3 of the utility expenses (water, garbage, electricity, etc. (not mortgage)) and my brother and wife pay for the other 2/3. Should my brother also pay rent? He has a well paying full time job.

    • CCS

      Hi Michael, whether they’re paying for part of the utilities or for rent, the fact is that they’re financially contributing to the household. Of course, if they were living on their own, then they would be paying their own utilities in addition to rent or a mortgage. Whether they’re contributing enough or could contribute more is a question that the household should discuss together as a family, taking everyone’s circumstances into account.

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