As UK inflation hits 11.1%, millions of households are set to struggle with the rising cost of living this winter.
Whether you’re approaching retirement or managing pension income, you might need to revisit your household budget. Doing so could highlight areas where savings can be made and help you to free up additional cash.
If you share your household with a grownup child, times are likely tough for them too. Many adults are even weighing up a return to the family home.
These so-called “boomerang” children could have a large impact on the household budget and your long-term financial plans.
What effect would your child returning home have on your financial security and what can you do about it?
Keep reading to find out.
Adult children are looking to return to the family home as the cost of living soars
Aviva recently reported that one in five independently living children are considering a move back home as the living costs rise.
The main reason was to save money – through decreased rent and bills. But what would that mean for your finances?
The report found that more than a quarter (28%) of parents who currently receive rent from their children feel that their loved ones aren’t paying enough. Interestingly, only 12% asked their children to pay more.
There is also a discrepancy between the amounts adult children think (or claim) they are paying, compared to the reality. While parents confirm that they receive £197 a month for rent, their children claim to be paying £318 a month.
If your child hasn’t returned home yet, a move may still be on the cards. The survey of 3,000 parents and adult children confirmed that up to 2 million independently living adults (aged between 18 and 34) could be set to return home.
While 20% plan to move home, a further:
- 9% have talked about moving home but have no concrete plans yet
- 8% have plans but have yet to talk them through with their parents.
As well as wanting to help your loved ones through (potentially subsidised) rent and other financial support, you might find the additional rent relieves your money worries.
You’ll need to weigh up the costs attached to an extra member of the household – another mouth to feed and increased utility use – against the added income they provide.
This might mean having some difficult conversations.
Careful planning and discussing expectations are key to maintaining financial stability
A larger household can add more money to the collective pot and ease financial struggles, but only if each party is pulling in the same direction.
If you can afford to support a loved one through the cost of living crisis, that’s great. But it’s always worth keeping eye on your future plans too.
Conversations about money aren’t always easy. In September, we looked at why the post-text generation holds the key to talking about money and found that regular and early communication regarding finances can:
- Instil good saving and spending habits
- Prevent arguments between couples
- Help to avoid will disputes.
In the context of welcoming a child back into the family home, it can set expectations and ensure that everyone is on the same page. Ask your child:
- How long do they intend to return home for
- How much can they afford to contribute to rent and bills
- How might they contribute to the household in other ways.
Think about the financial consequences of the answers they give. How do they fit into your short-, medium- and long-term plans?
You need to weigh up your desire to support your loved one with maintaining your savings and investment contributions.
Remember, supporting yourself through retirement and in later life (when additional care might be needed) is the main aim of your financial plans. Be careful not to jeopardize that.
Get in touch
As the cost of living crisis continues, you’ll want to support struggling loved ones if you can. It’s vital, though, that you do so sustainably and responsibly so it doesn’t upend your long-term financial plans and security.
At Hartsfield Planning, we can use our decades of experience to help you manage your household budgeting, support loved ones, and maintain the payments you make to support your future self.
If you would like to discuss any aspect of your long-term financial or retirement plans, please get in touch and find out how our team of expert planners can help.
Please note
This blog is for general information only and does not constitute advice. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.