Your son or daughter may be finished studying and is finally able to face the harsh realities of the working world. As a parent you are possibly proud of their achievements but even a little relieved to have some of the financial burden eased by your kids making their own way. Naturally you’ll still be willing to assist where you can but also need to make it clear that it’s time for them to be more financially dependent. This brings with it at often awkward issue – how much rent or board and lodging should you charge a child? Or any family member that decides to move in with you? Should you even charge rent? Is there a line between helping family out and being taken advantage of?
The web is filled with tales of families who allowed a down-and-out relative to stay with them, only to have the same relative take a relaxed approach to job-hunting or spend afternoons drinking beer in his underwear then passing out on the front lawn. Or kids who drop out of varsity with hopes of becoming professional skateboarders. What may have started out as an effort to help family ends up being expensive and stressful. The problem in many instances is that ground rules were not set, or when rules were transgressed swift action was not taken.
Now it’s not necessary to hire some bulky men to break your work-shy son’s thumbs to stop him from spending time on the Playstation, but before any family member moves in the ground rules need to be established. They need to know how much they are expected to pay, when payment is due and what is included in their rent. Will they need to contribute towards groceries? Extras such as satellite TV? Will they be expected to help with housework? Discussing this upfront (and perhaps having a written agreement) may help to avoid tension and misunderstandings further down the line.
Not sure what to charge? Below are a few handy hints:
• If you’re helping out a child who has landed their first job, you can set a fee by looking at their income. It might not be fair to charge them half of their salary, but it is important that they are not a burden on you and that they learn to budget. Opinion varies, but percentages of between 5% and 20% seem to be common.
• Charge a fair market price. Find out what rentals in your area are worth and use that as a base. You will be renting out a portion of your home and can charge a corresponding amount of rent.
• You could look at a system whereby your family member pays utilities, a portion of groceries, internet or phone bill in lieu of rent, but you would have to set and adhere to limits upfront.
