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More and more adult children are moving back with their parents. Here's how to make sure money doesn't strain the arrangement.

Young adults are moving back with their parents at unprecedented levels. And, among the issues that sort of arrangement can raise, the inevitable question of money is bound to crop up — be it about rent, food or other financial elements of living under the same roof. And among those elements is knowing the primary reason children boomerang back home is to get their financial homes in order.

“The circumstances surrounding the return of an adult child to the empty nester home are important to keep in mind,” cautioned Dr. Richard Horowitz, author of "Family Centered Parenting.”

In its own way, adult children moving back with their parents may be the new normal. The Census Bureau reported in 2014 a record amount 15 percent of millennials (ages 25-34) were living with their parents. By contrast, in 1980, less than 10 percent of people in the same age bracket called mom and dad’s house home.

Rising student debt levels have been pinpointed as one primary driver of millennials moving back home. A 2014 study by the Federal Reserve suggested that as much as 30 percent of millennials returning to live with their parents could be attributed to skyrocketing student debt. Estimates hold that the average college student who graduated in 2015 did so with more than $35,000 in student debt.

Add to the ongoing challenge of finding a postcollege job that pays a sufficient living wage, noted Christina Newberry, founder of AdultChildrenLivingatHome.com, a website geared to helping parents and grown children cohabitate more successfully.

“Compared to 10 years ago or more, it’s just harder to come out of college and have a career that can support you,” she said.

But not all factors are necessarily negative. Newberry suggested relationships between parents and children have changed and have drifted away from the traditional authoritarian “my house, my rules” arrangement.

“Ten years ago, moving back with your parents meant having to live under all sorts of rules again,” said Newberry. “Parents are more like friends with their children than they used to be.”

Set the ground rules

However more equitable parent/child relationships may have become, experts agree it's essential to establish clear financial guidelines before they move back in. Begin with a budget that estimates overall monthly living expenses with a grown child back in the mix.

Consider, too, the primary reason for the return home, added Horowitz.

“Do the parents feel their child has done everything possible to avoid returning or do they harbor suspicions that their son or daughter is taking the easy way out by coming home?” he said. “If it is the latter, then this issue must be dealt with as a discussion starter.”

That segues to the inevitable question of whether to charge rent.

“If he has an unpaid internship and is working on building a resume for a good job to follow, then the answer is no, because rent would only slow down the ability for your child to move out,” said Linda Perlman Gordon, co-author of “Mom, Can I Move Back In With You?” “If you find yourself with a child who sleeps in, hangs out on the sofa watching Netflix or playing video games, the answer is a resounding yes.”

Even a modest amount of cash paid to parents every month carries a benefit beyond the merely financial, Newberry added.

“Adults have financial responsibilities, so it’s important to maintain them even if your child is living at home,” she said. “It’s good for their self-esteem.”

If an adult child has no income, don’t be hesitant to consider other ways to contribute to the household. Chores and other help around the house can be used in lieu of cash payments.

Write up a contract

No matter the specifics of the arrangement, draw up a written contract covering every possible issue of living at home. In addition to rent, food and other obligations, consider including:

  • How much is moving back home? “Moving into a home with a household full of items could cause needless strain and stress," said Jonathan Deesing of imove.com, a moving resource website. "Part of the renter’s agreement should include how much space they have available for their stuff — temporary storage units are much cheaper than finding a new home.”
  • Set financial limits. No parent wants to deprive a son or daughter of necessities, but don’t make the stay at home a carte blanche deal: “Don’t alter your retirement plans or decision to downsize in order to subsidize your child,” Gordon said.
  • Set a timeline. Pinpoint time-based benchmarks that can keep a child focused on eventually moving back out on his or her own. These can include finding a suitable job, reaching a certain savings level or other reasonable goals that are allotted a sensible amount of time.
Timelines, financial obligations and other aspects of living under the same roof have consequences. A missed payment, a poor job market and other missteps can lead to ongoing arguments or, even worse, a sudden demand that a son or daughter move out immediately.

That, said Newberry, makes ongoing communication essential to track certain goals and spot unanticipated problems in a calm manner.

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“Everyone knows that this is likely a situation that’s not going to last forever, so it’s essential to be really clear about everyone’s expectations,” she said. “It’s important to talk about things in advance; if something isn’t happening according to schedule, why not? It’s less likely that things will come to a tipping point if everyone continues to communicate.”

Update: The story has been revised to remove information provided by a source regarding a mother and her adult daughter.

Jeff Wuorio lives in Southern Maine, where he covers personal finance and entrepreneurship. He may be reached at jwuorio@yahoo.com and his website is at jeffwuorio.com.