Every parent wants the best for their kids. If we’ve struggled in life, especially financially, we don’t want our kids to go through that. Yet as my 22 year old son has been off school these last couple of months, I’ve come to wonder whether I’m actually hurting him more than helping by not expecting him to pay for any of our household expenses.
Since he brings in about $1,500 net income per month – and spends it all, it occurred to me that he actually spends as much or more than I do per month on those variable expenses. WTH?!?
Charging rent prepares your kid for the real world
When my son moved out last year to go to school in another city, paying rent, utilities and buying food on his own was a huge surprise to him. He’d never really had to watch his spending and (I should be embarrassed to say this) had no concept of planning ahead and having some kind of reserve. Because he’d always been living at home rent-free, he just spent whatever he made. And he spent it all.
He ended up coming to the “bank of Mom” multiple times so those 4 months of school where he was living away from home wound up costing me over $8,000 – and tuition and books were only $3,500 of that amount. I made the very big mistake of giving him unmonitored use to an add-on visa under my name and believe me, the little things added up. Needless to say, it got taken away when I saw fast food and bar charges show up on it.
He didn’t want to get a student loan and because there was a “mom loan” option, he didn’t have to. Yet he shows no sign of intending to pay me back – which would be okay except he passed very few of his courses last year – not due to lack of ability since he was an honors student in high school. So I might as well have invested my money in BP stock or flushed it down the toilet.
What’s the criteria for NOT charging?
There are some circumstances where I don’t believe that parents should be charging rent to grown kids. Here’s a few of those situations:
- Are they going to school full time? If a kid is going to school full-time and living at home, they definitely need all of their money for school or risk having their school work suffer by working too much. That happened to my oldest son while he was still in high school. I ended up having to call his workplace and setting a reasonable limit to the number of hours I thought he should work. But what if they don’t pass? Should a parent pay for a kid who doesn’t put the effort into their school work?
- Are they saving to buy a house or other wise investment? If I had a kid who was a great saver, I’m not sure if I would charge rent to them – yet logically this is definitely a double standard.
- Have they fallen on hard times via job loss, pregnancy or other unplanned incident? If they’d quit a job before finding another I wouldn’t consider that to be something I supported.
- Are they a huge help around the house? My oldest has been a great source of help with raising my youngest son. Due to the wide disparity in their ages, he’s almost been a pseudo father. I managed to avoid daycare costs for a couple of years because he was there to send my youngest off to school and be home when he got home from school.
What’s a reasonable amount to charge?
I’m not sure what a reasonable amount to charge your own kid is – but overall I think it would be what you would charge to rent out a room in your house to another independent adult who isn’t your kid. My son thought that $500 was a reasonable amount where I think $400 (includes food) and walking the dog for me on days that I work is reasonable. That amounts to less than 30% of his take home pay – and who knows, it could give him the push that he needs to find a better paying job, which he is certainly capable of.
Hindsight is 20/20
In hindsight, I think I’ve done my son a great disservice in not expecting him to be more financially self-sustaining from the time he turned 18. If I’d been smarter at the time, I would have charged him rent in those years when he wasn’t going to school and then returned that money to him to help pay for the years that he was going to school.
I may have made it sound like my kid’s a complete flake but apart from money (and school apparently), he’s very responsible. He’s always paid for his own cell phone, vehicle, most of his clothes and all of his entertainment costs.
Since he’s going to be taking this year off from school, I think it’s about time he learned how to budget his money a little better and that includes paying housing costs like normal adults do. In fact, I may end up charging him the $500 per month and then helping him out with a damage deposit or first month’s rent when he does move out (due to me selling the house) later this year. And come to think of it, I should be getting those visa bar charges paid back too. It’s totally my fault for not setting clearer expectations right from the beginning.
What scares me more than anything is that I can see him heading down the slippery slope of spending beyond his means like I did. The only way I can see to prevent that is to advise him not to get credit cards – and it’s a start in the right direction to not owe anybody anything – including your mom.
What do you think? Am I being too harsh? Or not harsh enough?
Did your parents charge you rent? Does it help kids be more responsible when they have to pay normal living costs themselves?
I think charging rent is only part of what is necessary to teach young adults how to manage their money effectively. I was charged "rent" as a young adult, but because I had no other financial teaching, I didn't really learn the lesson well. It took till I was in my early 40's to "get it right".
I think charging $500/mo plus paying back the bar tab is more than reasonable. I would put $150-200/mo into an account to use towards reasonable expenses your son might have in the near future – further education costs, setting up his own apartment, etc…
I don't know how receptive 22 yr olds are to "financial teachings" but I would try to teach him some good budgeting skills over the next few months… perhaps you've already done this?
I have much younger children and the older two (10 and 8 yo) already are responsible for their own money. They must budget their allowance money to cover the costs of all their expenses (which granted, at 10 and 8 aren't very high!) but as an example, my 8 yr old has saved her planned spending money for 9 months ($4/wk plus birthday gift money) to pay $200 towards a special horse riding camp this summer! She wavered back and forth a few times, thinking she'd rather buy herself a toy but when she made her final decision, she was happy with it, and vows to save up for her next exciting purchase in the fall. Good lessons to learn! That's not to say my kids will be geniuses with their money at 20 but a little hands-on experience won't hurt.
MM – I actually believe that you can take how your kids are right now with money and pretty much guarantee that they will be the same at 25 or 55. It sounds like your two are similar to my 9 y.o. who is saving his money to buy a car of all things! He's a little miser. My oldest has always been kind of oblivious with money since he started working 10 years ago (at 12 y.o.). Lucky for him that he's a good worker at least.
And I think it's critical to treat your children the same in order to avoid hard feelings between them.
I think you're right that I should sit him down – or go to the bank with him to set up a good "off the top" savings amount of $300 / month or so (20% of NI) that gets deducted from his account (into a TFSA or similar – something that can be withdrawn without penalty to pay for school or a house) into a decent mutual fund. Take another $500 for his room and board and he will still have $700/month to spend freely which is pretty generous I think for a single guy.
I have to admit I was kind of hands off with him financially because I thought he had to learn his own lessons, I'd just prefer they hadn't been at my expense! lol Truth is, if I hadn't been able to absorb it without noticing, it wouldn't have gone on as long as it did. Oh well, it could have been worse. He could be lazy or something, fortunately that's not the case.
I honestly can't believe living in a household with a mother so frugal didn't rub off, just a little.
But he's a smart kid, he will get it if you make him get it.
The time spent living away from home shocked him a little, now he needs to get a grip on reality and pay for his own room/board.
Period.
You set the rate by whatever means you want and what you do with his money is another thing. If you set it aside for when your house sells, great. If you attribute it towards his schooling again? great.
Why is he not going to school this upcoming year? I would start asking those questions first.
Oh and the bar tab? We would have totally done that if we were given the chance. He should pay you back, but honestly you allowed that. Lesson learned!
Oh and I forgot to add, if you don't start charging him something, he may end up like my brother did, move out at 30, and not have a CLUE as to how to provide for himself (and his new wife and new house!).
He still asks my parents for money, and he's now 46.
Sad really.
WBY – my parents were in the top (or bottom – lol) 1% of frugality people and it didn't rub off on me for quite a few years – or my siblings. I don't think it rubs off on kids so much as it just makes frugality not seem unreasonable when you have to do it. And I wasn't so frugal anyway when he was younger. And I'm not now because I don't have to be.
The visa got taken away when I saw the bar tab, so I wouldn't say I allowed it.
I think my saving grace is going to be the fact that I actually won't be able to afford to help him out much anymore – unless I go back to work. If helping him out means that I have to cut back, then I'll feel the pinch. The problem is that I never felt that pinch because I was making so much money. In future I won't be. I guess that's a positive!
JJolie – forgive me if this posts twice. I've already commented once, but I may have forgotten to hit the post button the first time.
Anyhoo – I can't speak from a parental perspective, BUT…
My Fella is 7 years younger than I am. When we met he was 27 and knew almost nothing about money/savings/personal finance. He had no house, zero savings and he leased his car. His parents didn't teach him anything about investing or saving for the future. His 'live for today' attitude was very frustrating and we almost broke up, until I took control of our combined budget.
His parents are both school teachers and I really wish they would have taught him the simple basics of personal finance.
I'm always amazed that kids today get more Sex Education than Money Education.
Both are so important.
Hey Kelsi – They're teaching my 9 y.o. sex education right now in school. He's quite grossed out about it all. lol
I told my oldest that this week we're going to the bank and setting up a TFSA for him. We had a good talk where I explained how he can spend what he has every month and that's not a problem – as long as he saves some off the top. That's the method I used for years and it works. Will also have to explain to him that as his income goes up, his savings should go up too. I kind of forgot that part.
I'm hooked on your site. just thought I'd throw that out there…
anyway, I am a parent who is probably a bit on the tough love side. Maybe too much. I just feel that if we can replicate a "real world" situation while they are in the safety of our care and in a somewhat 'controlled' environment, we should take full advantage of the opportunity.
one day our beloved little ones will face the same world we do and they will thank us for the preparation. (or curse us for being too hard?)
Time will tell
Thanks Mike! – I do agree with you. I was quite protective of him when he was younger because of all the crap out there on Oprah and the like – the serial child killers lurking behind every corner and the "precious children that need to be protected from life" media (and kept inside propped in front of a TV or video games of course because they might get run over crossing the street). I think we've created a bunch of namby pamby kids that will need their parents support for a long time because of it.
The younger one told me today that he doesn't think it's wrong for me to help his brother out and not help him out in the same way in future because he thinks the older one needs my help more!
Like any mistakes, it's not so bad as long as we learn from them. I certainly have and I wish I'd given him a bit more (ok a lot more) financial education along the way. If he'd saved 20% – or more – of everything he'd made thus far, he'd probably have $30-50k in the bank right now. Which is wild when you think about it.
Some of us take longer to learn then others. Look at the many adults who don't have a good grasp of their finances. My son has earned a good income since he was 13 and was a great saver and very frugal until he turned 16. Now he spends every cent he has and I've required him to save at least 20% to use for university. If he didn't go to university I would most certainly charge him rent and probably put aside the funds for his future. We've agreed to pay his university fees, but have stipulated his grades must be acceptable otherwise he is just wasting his time and our money.
The problem with middle class parenting is that the funds are often available to assist/protect your children and as a parent it is natural to want to do so, but in the end, it isn't really the best strategy. You have to force yourself to be firm.
Anon – you're totally right, the money wasn't a big deal to me since I wasn't on any kind of budget and I wasn't really conscious of how it was adding up at first. He really has always been self-sufficient as I haven't paid for anything but food and housing for him for probably 10 years (apart from gifts). He hasn't been a financial contributor to the household but has contributed in many other ways that meant more to me than money.
I will be firm!
Hey Jacq,
Sounds like you've done a banner job parenting. I also think there's a birth order thing here. My eldest isn't as good with money as my youngest.
Much like your son, when my eldest was in high school, she had a part-time at a grocery store, and I was constantly calling them reminding them of the maximum number of hours she agreed to work. Eventually she quit because it was too much.
I was never charged rent/room and board when I was growing up, because I never lived at home after high school. The University of Toronto was two and a half hours away from my home (at the time), so I lived on campus. I learned very quickly that I wouldn't be hanging out in the pub if I also wanted to eat. After University I got a job that actually came with an apartment, then I got married and was out on my own.
With my own kids, I certainly see them hanging around longer.
I've let them both know, once they're out of post-secondary school, if they're still at home, I'll be charging them room and board. While they're home and in school full-time, I'll provide the necessities of life, but they're on their own for the extra stuff.
I pay for the cell phone of my youngest, but not my eldest. My eldest uses it to text and chat with her boyfriend primarily, the youngest uses hers to let me know where/how she is, primarily.
The only clothes I pay for are things like winter coats, boots, undies, bras, school essentials (uniform). Obviously, they have food, shelter and any medications they need.
I'm a bit contradictory in that my eldest is a part-time student right now, and not working. She is, however, on the job hunt. I want her to work and pack money away for the next 4-5 years of University because I absolutely need her to help with this. She didn't start looking as early as I would have liked, but at 22, she too has to learn a few things for herself.
When she can't pay her own cell phone bill, I won't bail her out. She's getting very close to this now.
The youngest does a fair amount of babysitting. I think her part-time babysitting is more lucrative than my part-time job! She has opened a savings account for a trip to France/Italy next summer, and was smart enough to ask the Branch manager to make sure she had to come into the branch to withdraw money, so she can't get to it with any impulse purchases on her debit card. She only decided in January that she wanted to go to France in 2011, and she's already tucked away almost $400. Not bad for a kid with no "real" job.
A long way of saying, yes, I'd charge rent if I were you. Like some of your other readers, I'd also likely tuck a portion away for them, without letting them know, as a return investment for their own head-start (school, housing, etc).
Thanks MCM! I'm lucky to have two such great kids. I think they've taught me more about how to live than I've taught them at times.
Also, in thinking about your oldest daughter – I remember when I was in my late teens and living away from home (I graduated H.S. and moved away from home at 16 yo) and having a hard time finding a job during the 80's recession/depression. My oldest sister came up and stayed with me to help me look for a job. It can be hard for kids to do these simple things on their own, sometimes we need a push. In hindsight, I'm very grateful to her – at the time I was as well.
I think sneaky savings for kids is the ideal way to do it. I lost a bunch of his RESP money in the 2001 dot-com implosion through following the Wealthy Barber advice and not paying attention. Definitely won't make that mistake again!
I definitely think you should charge your kids rent especially if you know they can afford it; as in your son's case. The reality of the world is going to hit them at some point and learning the ropes with a safety net (staying home with minimal rent) is a great way to prepare your young adult for the future. Budgeting, saving, and working for things build character and teach values your kids need to survive. So go ahead and charge them! I knew someone who took all the rent money their child gave them and saved it for them-as a down payment on their first house! You don't have to be that giving – just teach them a lesson-they will thank you for it later!
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Yup, I paid rent to my parents the minute I stopped going to school full-time. Not only that, but my Dad co-signed a car loan for me, & made me sign a contract with him that if I ever missed a payment, the car keys, along with the car, were his. I'm sure this may sound harsh, but now in my 40's I'm better with money than most of my friends. The lessons stuck with me–thanks Dad!
Thanks for commenting Suzanne and Anon! – I guess it's just hard for me to see him as an adult sometimes – I still want to take care of him, I can't help it, it's my mom-ness and he'll always be my baby. So far, it's unanimous which is good, I don't feel like such a meanie!
I'm really enjoying your writing and perspective, really enjoyable blog. Also love the approach to frugality and early retirement from a perspective of a parent.
Thanks so much Anon.
Yes, there aren't many parents with kids at home that are retired (or doing their best to exit like I am – lol) out there.
Jacq, I was GLUED to this post…. My daughter is home for the summer after spring semester in Europe for the end of her JR year in university. As we see this as our last chance to make an impact, we have upped the structure in our home considerably. Can't use our car except to go to and from a night class. Takes the bus downtown for internship. No money from us for anything. AND, much stricter house rules, do all of the dishes every day, trash etc. By 9:30 am must be showered, room & bathroom clean. I think were a little to lenient on many levels and we are trying to create a bit more accountability while we still can! Next year, she is also paying more for her eduction. I definitely think you should charge your son rent. (Keep the cash in a separate account and if he learns to save and manage his money well, you can decide to "help" him in the future-with his own money). Best, Barb
Hey Barb, better late than never I guess! Yes, I was definitely too lenient as well. I'm not sure if it's the times, wishing I didn't have to be or just rebelling at my own parent's being strict. Plus he's been such a good kid in other ways, I feel like I'm being mean to him I guess. But it's just reality.
Who says the job ends after they turn 18? lol
Just harsh enough. I am going to do the exact same thing to my kids when the rugrats start working just so they understand that bills are a fixed part of anyone’s budget.
30% sounds reasonable. And I’ll probably set it aside and let it accumulate to gift them with it as part of their college fund (I’ll be saving on the side too, to pay 50% and have them be on the hook for the other half).
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He paid for clothing, phone and entertainment from the time he was in high school?
He had a job that gave an income of $1500 a month? Pretty good for high school! Was it full time?
You have a son who helped you raise a second son- including daycare. Was he paid for that? What do you expect your younger son to do on the same level of responsibility?
I do not agree that you should have expected him to save 20-30% of his money in high school.
I agree that he should be paying a bit of rent. I’d put that rent into a pot that you will give him when he needs it. I wouldn’t tell him it is there.
He has way more skills than you think. I am betting he will be fine. Don’t expect that he will return to college anytime soon. That doesn’t seem to be the trend. That is alright as well these days.
It is the younger son I would be worried about….
Hi Jan, yes he has always paid for his phone and he’s not really big on clothes or entertainment, he’s kind of a minimalist that way. He’s found ways to minimize his entertainment costs – like working in a video store for awhile. I’ve definitely bought him clothes in the past when I’ve found things I think he would like. It’s so hard for me to tell what’s popular or not though.
He wouldn’t have been earning $1500/month in high school, probably closer to $500 or so?
I agree that he’ll be fine though. He’s an awfully hard, conscientious worker and smart as a whip. I’m not worried about the younger one as he’s very resourceful and already asking when he can get a job.
I’m not sure about kids being paid to babysit their siblings. I don’t think an hour or so a day is such a huge imposition.
It amuses me, the fact that parents often ask themselves that question: should the kids that are legally adults pay to live at home. Not because the one choice or the other is correct. But because those parents forget one very very important thing: table can turn easily.
This was my case for example: I was spending my parents money for 23 years (until the day I graduated I have worked for only 1 month and just because I wanted to see how does it feel for my college mates who simultaneously work and take their degrees – to be honest it is NOT nice at all, it is something I would make everything possible to not put my child trough when the time comes).
Then just at the time I was starting my career my dad had cardiac arrest and spent thousands on recovery, the doctors took away his work permit, so he was left on one tenth of what he was making. My mom also lost her job around that time and was taking jobs here and there on very low wage just because she was not in the ‘preferred age group’ (meaning she was 50 back then and once you are 50 … this was an answer to your question ‘is it hard after 50 to find job – yes, it is).
They have lost pretty much everything as they were not able to adjust to the low income situation, continued to spend as if they were making the same income and sooner than later there was no money, instead there was debt. I have bought their properties from the bank, I have payed their cash and credit card debts and I am allowing them to live in now my property. I also has monthly allowance for them as now my father is no longer having any income (except 100EU pension the country is paying for his condition, which of course is not enough considering the multiple medications he must take (and pay for) just to stay healthy as much as possible for his condition).
Now – should I make them pay for living in my property (meaning otherwise it should have been rented as I live in my own apartment in another part of the city), should I request interest in the money I am borrowing them when the allowance is depleted before the end of the month. What do you think? Just imagine the situation and consider what would be okay.
And one more thing – I am “ANTI”-training kids. I believe one should not put them trough hard times just to teach them lessons. Explaining and encouraging the right choices, accept the wrong ones and help/push in the right direction the next time is what a parent should do. Not ‘train’. Not repeatedly punish just to show “how it is done”. As I understand the problem (and it is a studied one – the parent-child relation and influence/encouragement/approving of decision in the different cultures, if interested the details are available online) it is just the fact that North American culture deflates the value of parental advise for the last several generation and parent are forced to make those hard choices (like the one you have made – to charge or not to charge) just for the sake of their children’s best interest. Note that I am not saying you did wrong, I am saying it is too bad that he had to face this. I would prefer for my kid to learn about this from me, not first hand. Education is not only in school and college, it can happen at home as there are many things to be learnt, however, remember that at school children are not forced to discover theorems anew, they are thought how it was discovered and how to use it, smart parents find a way to tech the same way what they want kids to know.