Should You Charge Your Adult Kid Rent? Here’s What This Personal Finance Expert Thinks

Two young adults wearing loungewear use their devices and a pad of paper to discuss finances.

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The best way to grow up may be to stand on your own two financial feet.


Key points

  • As of 2022, a record number of adult children were living at home with their parents.
  • The number of young adults living at home has led to a boom in luxury spending.
  • Experts agree that adult children should pay rent.

In 2022, a record number of young adults between the ages of 18 and 29, lived with their parents. That’s the highest level since 1940. These so-called “boomerang kids” are either staying at home or are back home for a variety of reasons.

According to the financial planning company Prudential, some are staying with mom and dad so they can save up to buy a home. Others want to pursue higher education or simply enter the job market later.

“Many parents will do whatever it takes to make sure their kids land on their feet and are ready to take on the world around them, and that includes financially supporting young adults ‘boomeranging’ back home,” said Susan Somersille Johnson, Prudential’s chief marketing officer. “For many families, this can dramatically change retirement plans.”

If your household includes adult children, you may wonder how much you should expect of them. Should you charge them rent? Here’s what one financial expert has to say.

It’s a hard yes

Ex-Wall Street trader and internet superstar Vivian Tu goes by the handle YourRichBFF. Tu dispenses financial advice via her website and through many social media channels. When addressing the issue of adult children paying rent to live with their parents, Tu leaves no question as to where she stands on the subject: Parents should be charging rent. Tu’s reasoning is as follows:

  • Young adults living at home have more discretionary income that is not being spent responsibly. Tu points to the fact that these young adults are driving a luxury spending boom. According to financial services company Morgan Stanley, the record number of adults living at home is helping drive the boom for luxury goods in the U.S. and UK.
  • Of those luxury goods Tu said, “While some pieces are investments, most will go down in value. And it’s not fair to throw your money into a pit while someone else is covering your necessities.”
  • Having an adult child at home makes it tougher for parents who count on a pension, 401(k), or savings to get by. After all, they’re adding to their parents’ utility and grocery bills.
  • Adult children should pay rent, even if their parents don’t need the money. She suggests that financially secure parents collect rent and put it away in a savings account for their child. “Ideally, this will get your kiddo out of the nest, on their own two feet, and paying their own rent sooner rather than later,” Tu said.

Tu is not alone

Tu is not the only financial guru to suggest that adult children living at home pay rent. According to SmartCapitalMind, financial experts agree that parents should charge rent to adult children living at home or in another property the parents own. Financial advisors have seen cases in which young adults don’t learn to take the obligation of paying rent seriously and end up deeply in debt.

Young adults who understand that rent and fixed living expenses must be a priority are less likely to fall short on housing payments later on.

Psychologist Dr. Henry Cloud once said, “To rescue people from the natural consequences of their behavior is to render them powerless.”

If what Dr. Cloud said is true, perhaps the kindest thing you can do for your adult child is to allow them to pay rent.

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