Money Rules For "Boomerang" Kids

The unemployment rate for young adults has reached its highest point since 1983, and many so-called "boomerang kids" are moving back home with Mom and Dad. Some 15 million young adults reported living with their parents last year and, in this column and on "The Early Show" Thusday, financial guru Ray Martin shared important guidelines for families in that situation.

In some ways, it's an old story -- college grads have been moving home for years to save money for their own home, or to make a dent in student loans before heading out on their own.

But now, it's different.

Many young adults are moving home because they have no job, period. The National Association of College and Employers said this year's graduating class received 22 percent fewer job offers than last year. And the U.S. Department of Labor reports that the unemployment rate for bachelor's degree holders under age 27 is the worst since 1983.

In addition to a dour job market, college grads are leaving school with higher debt levels than ever before and, even though housing prices have fallen from earlier highs, living costs have certainly outpaced the starting salaries of many young adults.

Parents and these "boomerang kids" alike need to realize they're not alone. In 2007, 55 percent of men and 48 percent of women aged 18-to-24 lived with their parents, and certainly those numbers have only grown since the recession hit.

Neither parents nor kids should feel like moving back home is a "loser move." If you can make the situation work, it's actually a really smart financial decision for everyone involved.

But, if you decide to do it, rules are essential and parents should not be wussies about carrying out those rules:

DON'T provide a financial bailout: Although it may be tempting, parents must realize that simply making out a big check to their child truly doesn't help them in the long run. Not only does it fail to teach financial responsibility, many experts say it can actually hurt a kid's self-esteem. For many boomerang kids, having to move back in with Mom and Dad is an ego blow; they actually want to be independent. From a financial perspective, it's a bad idea for parents to co-sign on a credit card, school loan or car loan. If your child misses payments, you are held responsible and your credit score will be damaged.

DON'T make it easy to stay: Enough said, eh? Boomerang kids should be expected to pick up and clean the house to your standards, not their own. When meals are provided, they should be expected to contribute toward food bills, preparation and clean up."

DO set a deadline: Kids should not be given an open-ended invitiation to move back home. A deadline is important; it enables you and your child to measure the progress the grad is making toward becoming independent. If your boomerang kid has a job, perhaps the deadline could be based on a date: After X number of months, he or she will have saved enough to meet X, Y, and Z financial goals and then can move out. If your child is unemployed, perhaps the deadline is based on finding a job or paying off a certain percentage of debt.

DO charge rent: Even a nominal amount is advised, so the young adult feels he or she is contributing something. It's a good idea to write up a rental agreement and stick to the payments on a regular basis. One way to figure the amount to pay is to base it on the percentage of rooms used. Say, for example, you have a ten-room house and your kid is using one bedroom; that would be ten percent of the house. If the monthly housing costs total $2,500 (interest, taxes, insurance, utilities, etc), then the monthly rent would be $250. Parents reluctant to charge their boomerang kids any rent should also think about this: With another adult in the house, bills for food and utilities will go up more than they might expect.

DO discuss household duties and rules: Address who will clean bathrooms, do laundry, take out the trash, etc. It may be easy for some parents to begin doing these tasks again when their grad moves home. After all, parents have cared for their kids for years by this point. But you are not living with a kid, you are living with a young adult who should be taking on some responsibilities. Remember, if your child has been away at school for years, he or she has figured out how to have clean socks and a full belly! Also, while it may be uncomfortable, parents need to address issues like curfews, visitors, etc. That is ot to suggest that parents set strict rules, but do make sure that both sides know what to expect.