About half the 20-somethings and grown children who move home pay some sort of rent, but there are many options between zero and market rate. Here are five possibilities:
- The percentage system: If junior was looking for an apartment he could afford on his salary – assuming he has one – a finance expert would tell him to cap his monthly rent at 30% or less of his take-home salary. Many families charge their boomerang kids a lower percentage, such as 10%, so their kids can stash the other 20% in a savings account or use it to pay down college loans.
- Flat rate: Others feel more comfortable charging a flat rate - $200, for example - to help cover the increased expenses.
- Nest egg: Some families collect rent, and then quietly set it aside to present later as a nest egg, a contribution to a down payment or a lump sum college loan payment. That way your young adult learns to budget for rent and other expenses – and meets his goals sooner.
- Water, power and HBO: Whether or not junior pays rent, many families have their grown children pay a share of the utilities, not just because there are increased expenses associated with a “roommate,” but as a reality check too. Novice renters tend to forget that there are more expenses associated with an apartment than that check to the landlord.
- Errands and chores: It’s important for a boomerang kid to contribute to the household, not only financially but in non-monetary ways too - running errands, cooking, lawn mowing or housekeeping.