Are adult kids at home the new norm?
MOVING out of home used to be a big milestone that usually happened not long after you finished your education and got your first job.
But these days, more and more young adults are choosing to delay leaving the family nest, because of the high costs of renting or buying their own place.
According to the latest AMP.NATSEM Income and Wealth report, Cost of Kids, it's older children that cost the most to support.
For a middle-income family, having a young adult at home costs five times as much as toddler. The new research reveals the average weekly cost of a baby is $133 per week, while those with an 18-24 year old at home shell out $678.
There are big financial implications for parents who are bearing the cost of adult children. While it's great to give the kids a good start in life, it's also important for parents to address their own financial security.
Here are five top tips for parents with 'failure to launch' kids:
No living off mum and dad - Let your kids know they can't treat you like an ATM. Start them early by letting them earn money doing chores. When they turn 15, encourage them to work part-time so they can start buying things.
No free ride - If older children are living at home it's quite reasonable to expect them to contribute by paying board. It's also acceptable for them to cover the cost of their own car and petrol, outings and clothes.
Take advantage of HECS - Many students cover tertiary fees by taking out a low interest loan under the Federal Government's HECS-HELP program. The loan is paid back through their taxes once they reach a certain income threshold.
Don't forget your own financial security - Before deciding how much support you can offer children while they're still at home, speak to a financial planner about what shape you're in for retirement. Take stock of when your mortgage will be paid off and whether you have a comfortable nest egg.
Have a launch plan - If older children will live at home for a few years, insist they have a savings plan so they can become financially independent and leave the family nest. If they're spending all their money on a brand new car, designer clothes and dining out, chances are they'll be no closer to moving out in five years. Encourage them to set short, medium and long-term financial goals and check with them regularly to see if they're on target.