This is a common situation that is often debated among parents of adult children, and the issue can be quite controversial.
Many parents feel that they are teaching their children valuable life lessons by charging them rent, while the adult children feel they should not have to pay to live at home.
But is there a right or wrong approach to this issue? John Manyike, head of financial education at Old Mutual does not think so.
“There is no blueprint for what is right and wrong insofar as young people paying rent. Families must do what works for them. Every family is different and should always look at their own circumstances when making such decisions.”
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More young adults living at home
Old Mutual conducts annual studies and reviews on a number of financial-related issues, and recent findings are that it has become “quite common” for young adults – those in their 20s – to still be living at home. Although the 2022 statistics are not yet finalised, he says data in 2021 showed that 18% of young adults were living at home or with family members.
“However, we look at both sides and we also found that 16% of young adults had family members move in with them. We are picking up that a lot of people are doing it because of financial pressures and the rising costs of living.”
In addition, there is also the issue of ‘black tax’ that affects Black African families and young adults, he says.
“The family places a responsibility on these young adults to financially support other family members and will not allow them to move out unless they renovate the house first, for example, or educate their siblings. It is even harder for young, unmarried women to move out for this reason.”
While the expectation is that the young adults are now earning a salary and should support their family, this responsibility is even placed on to those who receive NSFAS funding.
“The family does not see where the money is coming from, they just see that the young adult has money and so they should therefore be contributing to the family financially.”
Similarly, Manyike says, the young adults receiving this funding also feel like they cannot let their family go without food when they do have money to buy it.
Farzana Botha, segment solutions manager at Sanlam Savings, says anecdotal evidence shows that a lot of young people seem to have moved back home in recent years, mainly due to job loss or other impacts of the pandemic.
“In 2021, Sanlam Savings surveyed 1200 South Africans about the financial and emotional impact of Covid-19 and the associated lockdowns on South Africans. Through this, we found that...19% were now living with parents or other family members. These individuals were more likely to be between the ages of 18 and 29.”
With South Africa’s unemployment rate at 45.5%, many young people have been left unable to sustain themselves, especially if they have no emergency savings to speak of, she says,
“You may also find that parents are struggling financially and adult children move back home to help lighten the load – especially in instances where the family home is paid off.”
The argument for or against charging rent
This is a highly personal decision, Botha says.
“Financially, it would make sense to charge your adult children rent if they are employed and can afford to pay. This not only instils a sense of responsibility, it also allows the parent to save more towards their retirement.”
Echoing this, Manyike says every family unit and their situations are unique. However, he warns that there can be a “danger” when a child is made to pay rent and does this begrudgingly. This is because the relationship between parent and child is now transactional.
“If a child feels forced to pay rent and the relationship becomes transactional, there can then be an attitude from the child of ‘well then don’t ask me for favours or to do anything else’.”
The interaction can become like a landlord and tenant which could damage family relations.
“But this is always subject to the circumstances of a given family. There is a lot of poverty out there, a lot of lack, a lot of over-indebtedness. But also, if a child is not comfortable paying rent and they are being forced to, it can cause problems.
“If rent is being paid there has to be mutual understanding. As a parent you should always safeguard the relationship with your child; it must not be a transactional relationship.”
Young adults can also feel resentful if they know their parents are financially comfortable and do not need the money, but are charging them rent for their own benefit. Parents in this situation can, however, take the money they receive from their child and invest it for them.
“This can help the child get used to paying rent. They know that their parents are not charging them to support their lifestyles, but are doing it for their own benefit.
“Whatever the decision, there must always be a case of mutual understanding between the parent and child,” he says.
Botha agrees: “Whatever your decision as parent, it is important to have open and honest conversations with your child to discuss expectations and set boundaries. While it is natural for a parent to want to support their children, one needs to consider how these decisions affect your financial future. For example, if you use up your emergency savings, dip into your retirement savings, pause, reduce, or stop contributions, it will be incredibly difficult to regain this lost ground.”
Paying rent versus contributing to household costs
Many parents decide to not charge their children rent but, instead, make them contribute to grocery purchases and other household expenses. And Manyike feels this is “fair”.
“I think this is the responsible thing to do. We need to advocate for more family imbizos (meetings) where the parents and children negotiate in a manner in which the young people do not feel burdened to support the family.
“There are cases where the parents are unemployed and living off of grants that are really small and so the children feel obligated to contribute. They feel it is the responsible thing to do.”
He explains that this goes back to the concept of Ubuntu which he feels has now been replaced by ‘black tax’.
“A lot of young adults must realise that they too benefitted from ‘black tax’ and so they should also contribute, but not to the point where their contributions are being abused.”
If the adult has the means to contribute financially, Botha believes that giving them the opportunity to do so “instils solid financial habits”. If, on the other hand, the adult children are not working, it is a “great idea” for them to contribute in other means such as household chores.
“This will take some of the pressure off the parent(s) and make the child feel that they are contributing in some way. It may also give them a sense of belonging, especially if they had moved out and are now moving back in.”
She adds that contributing financially teaches adult childen to be responsible, to be aware of the cost of living, and to appreciate their hard-earned money.
“It teaches them to budget and to prioritise wants versus needs so that their income sustains them.”
Advice for parents charging rent
The amount a parent charges in rent is up to them – “perhaps a percentage of the rent/bond/household running costs, or even a token amount based on how much they earn”.
“It would be advisable to partner with a financial adviser to help you work this out and to figure out where to invest the additional income.
“If they are not earning enough, then talk to them about how much they can commit to contribute every month or what chores will they be responsible for. Make sure expectations are clear so that you can navigate this together.”
If the children are really struggling financially, Botha says parents need to have “the tough conversations about how much you can help so that you can work together to find a solution”.
“In these difficult times, the guidance of a financial adviser is invaluable.”
For parents who are charging their children rent, Manyike asks: “What are you doing with that rent money?”
He advises that parents use the money for investment purposes so that they do not become dependent on their adult child living at home.
“Invest in a small business, open a spaza shop, build or buy a small room or apartment that you can rent out for a passive income. People always need to rent properties. Use the money to start a business so that, when your child moves out, you are independent.”
Manyike notes though, that many families make it hard for young, black women to move out of the home. They want to keep them at home so that they continue supporting them financially.
“They delay her moving out. They tell her to concentrate on her career or studies just to keep her at home. They want to keep her there and unmarried as they worry about who will pay for everything when she leaves. They don’t just want to take the lobola.”
Older adults living at home
Apart from young adults still living at home, it is also common for older adults to move back home, Manyike says. There are a few reasons for this including divorce; job loss; the adult becoming over-indebted; perhaps they lose their property to repossession; or they cannot cope with living expenses.
“And again, families must decide what works for them in terms of whether these adults are charged rent. Each family has different values, nuances, and circumstances.
“But if the adult does move back home they cannot treat it like a hotel. Even in a hotel they have to pay. Unless they have lost their job it is only fair for them to assist financially when they move back home.”
He says these adults also need to take a long-term view of their lives when they move back home.
“What are you going to do with the money you are saving my moving back home? Are you going to use it to pay off debt? Are you going to save it? You need to have a long-term plan.”
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