Budgeting and Saving

Two key parts of money management to help you achieve financial success.
  1. Budgeting and Saving
  2. Should Working, Adult Children Who Live at Home Pay Rent?

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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12 Comments

  1. E gonzale

    I moved back home when my mother and father got divorced around 2004 I’ve been a licensed barber working till the 19 took that career from me. Let me back up. In 2004 I was around 22 years old and my mother needed help paying for a 3 story house that her and my father built to raise my 2 sisters and I about 2200sq ft already paid for once I turned 18 and I moved out . When the divorce happened they split the house and my father got half and bailed out on us my older sisters were already on their own. So now mother has to pay the other half of the home and that’s when I moved back home at 22yo. Helping her pay for the home about a year then both my sisters move in with two kids, girlfriend (not mine), and a boyfriend of my sisters. All rent free not paying for anything, my mother being a housekeeper for a wealthy family for 40 years is making a little under 50k a year and insists none of us pay rent. As long as we’re employed and save. All is well till the 19 hit and everyone moves out and it’s just mother and I and this is were life gets real. Mother retires and her income now s around a little under 40k a year , home is payed off, I’m out of a job and our home is in need badly of renovations. I from money I’ve saved overhaul our kitchen with new counter-tops, strip clean to the bone all cabinets redone completely new, build large new family table, stools, about 3k put new floors about 5k paint the whole home interior 3k worth, build new master bedroom with walk in closets, about 3k, paint exterior of our 3 story home about 3k repair 10ft tear in our fiberglass in ground swimming pool about 2k build a pool deck about 3k, break up about 500sq ft of concrete and brick 1k, install 200ft of cedar fence 4k, build a small cabin home in the back yard , about 9k, oven, dishwasher, dryer, fridge, 2 TVs 70 inch, turn bedrooms into small studies appliances, vehicle tuneups around 7k and yard tools, drills, saws all supplies and tools needed another 5k I payed for everything took beyond my savings had to become an eBay reseller of all my growing up collections of gold I recovered from computer parts , all my silver, world currency collection, my beloved tools and no help from anyone not any of my sisters who my oldest sister comfortably now has my mother’s housekeeping gig continuing with that same family now about to hit 45years(they are a wonderful family) and I’m starting to feel like I’m being used , my mother uses my car a 11 Taurus when she has a F150, WRX, and a ranger. I’m completely broke no time to hone a new carrier as my mother Is now becoming elderly living fabulous. Am I being used and am I entitled to any compensation?

    Reply
    • CCS

      You’ve been very generous with helping your mother. It can be very hard sometimes to draw the line at where to say no when helping family. If we understand the story right and you lived for many, many years with your mother as an adult rent-free, then one way of viewing this is that with the renovations you’ve been giving your mother the money you didn’t pay her in the past as rent. It sounds as though your mother actually couldn’t afford to have everyone living with her rent-free as she needed to save up money for renovations, but didn’t have the ability to do this with her adult children not paying rent. This is one perspective. Another perspective is that it’s good to have a written agreement in place before entering into something like this. That way things can seem fair to everyone involved and you don’t feel taken advantage of. It sounds as though you probably still have receipts from all this work. There is the possibility that you could still come up with some sort of agreement with your mother concerning all the money you have paid for the renovations. With the receipts to prove the expenses, it might be easier for other family members to accept whatever agreement you and your mom come up with. Your agreement could potentially treat the renovation costs as a loan, future rent paid in advance, or your mother could make you a part owner in the home. Is it possible to generate income with the home in some way such as renting out a portion of it? The income generated could be used to pay you back. There could be other options you could come up with as well. Another thing to look into is income tax considerations. According to your tax laws do you qualify as a caregiver? Were any of the renovations done for accessibility? We’re not sure if that could be claimed retroactively. The bottom line in this situation is that none of us are entitled to compensation for helping family. The love and care you’ve shown your mother is wonderful. However, if your mom is open to the idea, it could be reasonable to come up with some sort of agreement to try and make things fair. If you can come up with an agreement, then that will possibly help you to feel better about the situation so that you don’t feel you’re being taken advantage of.

      Reply
  2. F

    i’m a brazilian Young adult. As if living here wasn’t hard enough, my parents want to charge me money to live there. I know it isn’t easy for them too, but i’m trying real hard to save some money so i can actually buy myself a house or apartment later on, or do some investments.. but it’s kinda impossible. Here we don’t get paid much, our current money isn’t worth sh*t, pardon for the word. I just don’t know what to do.. and i get that this is a north american website, and the realities aren’t the same, but anyway… just wanted to vent. Thanks.

    Reply
    • CCS

      Thanks for sharing your thoughts. The realities in Canada can parallel your country more than you may think. Currently, buying a home or condo in some of Canada’s cities is so expensive that many young adults don’t expect to ever be able to afford a home. For someone who works a normal job at a restaurant, grocery store, or many other places, affording the cost of living in many Canadian cities is becoming very difficult. There are no easy solutions to these problems, but possible solutions could involve thinking outside the box and coming up with innovative ways to accomplish your financial goals. Rather than buying a home by yourself, you could partner with others. You could do some research to find higher paying jobs and then upgrade your skills to qualify for them. These days it’s even possible to work for a company that isn’t located in your own country. If you’ve ever thought of owning your own business, you could research ideas and see if there is some way to get started. These days there are tons of blogs, podcasts, and YouTube channels that you could glean ideas from in order to improve your financial situation.
      In regard to your parents charging you rent, if you’re a working adult and they don’t charge you something, then they’re subsidizing you and that’s not really fair to them. It’s only fair for you to pull your own weight. If your parents aren’t struggling financially and you’d like to pay less rent, then you could see if they’d be willing to allow you to do more chores in exchange for paying less rent, but if they don’t want to do this, then that’s fair. It’s their house. You could also look at finding a cheaper place to rent or renting a place with one or more other people to make it more affordable.

      Reply
  3. Betty

    My almost 30 year old daughter lives with me she pays 200 of the rent I pay everything else.She gets pissed off when I won’t let her boyfriend stay the night she saids why do I pay rent if I can’t have someone stay night I told her she pays rent to have a place to live I told her I am still the boss of the house.

    Reply
    • Jen

      I think I have the 20 year old version of your daughter because its the same thing here exactly!

      Reply
  4. Kathleen A. Jones

    I rented a home and my adult son lived with me and I paid for everything. Then his girlfriend in with him. I asked that they help with rent. They said they wouldn’t help with the rent unless I put my furniture in storage and let my son’s wife put her stuff that she had in storage in the house. I have nice furniture and decorated with high end things. I didn’t care how they decorated their bedroom, but don’t feel I should have to move my things out from rest of the house. I paid all the rent, all utilities and groceries. My son’s wife started using another bedroom as her office to work from home due to the Coronavirus. She never paid anything for the use of that room. She also had a very large dog that she had to pay a deposit of $500.00. My son and his wife moved into their own place after 3 years. She did not clean after they moved. I had to pay for someone to clean and paint their bathroom and the 2 bedrooms. Now they want me to gave them their dog deposit that the property management won’t return until I move. I don’t have plans on moving and didn’t agree to return the dog deposit. I didn’t want the dog here. I don’t feel that I owe them anything.

    Reply
    • CCS

      Hi Kathleen, It sounds like you’ve been very generous allowing two adults plus a large dog to live in your home rent free for 3 years. They are fortunate to have such a big hearted mother and mother-in-law. It’s unfortunate that sometimes some people can have difficulty seeing how generous someone has been to them. Maybe one way you could position this to help them understand would be to again explain that you don’t have their $500 deposit and the property managers won’t be giving it back to you until some time in the distant future when you move. However, you would be happy to give it to them now if they were to reimburse you for their portion of the rent while they stayed with you plus the cost to repaint the rooms they used. If your rent was $1,000 per month and they occupied 30% of your house, then it would be reasonable for them to pay you $300 per month. That amount multiplied by 36 months (3 years) would be $10,800. If this were the case, then you could show them that you gave them over $10,000 but now they’re asking for $500 that you don’t have. But you could give them their $500 back right now if they would reimburse you for their portion of your rent.

      Reply
  5. Patri

    If i pay for Gas , Trash, Security, Cable, Internet, Phone, Insurance , Electricity and a % of the yearly tax my mom has to pay after buying her apartment.
    While i save to get my own space after surviving a home invasion and the trauma of it and also after my college graduation ( i am not 30 or 29 yet or married or have kids )
    and also saving and working on more streams of income so i am able to be on my own space but still support my parents not because they need it but because they deserve it and i want to be a good daughter.
    Is this a good training for when i have to be on my own or with a spouse?

    Reply
    • CCS

      Hi Patri, it sounds like you have reached a good balance between contributing to the household you live in and saving for your personal goals. The most important thing is working as a team and having an arrangement that fits all of your financial needs. The responsibilities that you have now will definitely help prepare you for your own home in the future!

      Reply
  6. 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.

    Reply
    • 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.

      Reply

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