Do you have children who are living at home, but working full time?
I was having this conversation with one of my Money Moms today.
A great way to teach your young adult children about adulting is to charge them rent- especially if you want to help them maximize their finances as they transition to the real world.
There are so many ways to approach this, but here are few ideas to get you started:
– It is recommended that you do not spend more than 30% of your after-tax income on housing. If at all possible, make this your cap when determining how much to charge for rent.
– If your child is not working full time, but could be, you could make the rent just high enough that it is uncomfortable but doable to encourage your child to increase his or her hours. This would be a good reason to ignore the 30% “rule”.
– You could offer a slightly discounted rent if your child agrees to save a predetermined percentage and invest a predetermined percentage. Or you could increase the rent slightly and save on your child’s behalf. Your child will appreciate the savings when it is time to move out of the family home.
– Unless you have decided that rent includes maid service, set the expectation that all household members will contribute to household chores.
– Food is generally not included in rent. Allow your adult children to contribute to groceries based on how many meals they will be eating at home.
– Most importantly, no one knows your children as well as you do. Follow your heart and do what you feel is best for them and what they will learn the most from.