by Scott Pape |July 16th 2010
They’re called ‘kidults’ – the one in four 25-to-34 year olds who have yet to leave the family nest, despite having full-time jobs and part-time partners.
Ask any parent why they continue to sponsor their kids after they’ve finished their education and they’ll often tell you they’re giving their kids a financial leg-up. Yet in all the years I’ve been Barefoot, I’ve never met a kidult who was better off for an extended stay-over in suburbia. Not one.
And now I have the hard evidence to back it up. This week research released by UBank found only 18 per cent of kidults actually track where their money goes, and a whopping 59 per cent say that they don’t even think about saving, apparently because “they have other, more important priorities”.
It makes sense. Kids living at home don’t need emergency savings – that’s what their parents are for. Living in a nice home with food in the fridge and nary a bill in sight isn’t reality. In most cases it took the parents 30 years to achieve that level of living – and by rights it probably should take the kid the same time.
But as a country boy who moved to the city for university, I’m well aware that I’m biased. So to get the other point of view, this week I caught up with a mother and daughter act to get their take on the kidult experience.
THE DAUGHTER
Gabrielle is 25 and has always lived at home with her parents in the Melbourne suburb of Mt Waverley. Unlike many kidults, Gabrielle actually pays her parents $500 a month in board, which includes all outgoings.
After graduating from university five years ago, Gabrielle now works full time as a marketing executive and earns around $70,000 a year. Currently she has around $4,000 in savings and owes $18,000 on a car she recently bought.
Why do you live at home?
“I guess it’s just easier. I’m the youngest, so it fits my lifestyle at the moment. It’s not really that big of a deal – most of my friends still live at home.
“My parents have made me pay board since I started working full time, but it also helps me save a bit of money I guess.”
Do you enjoy living at home?
“I do enjoy it. I get along well with my mum. But if I got a significant payrise I’d definitely move out.
“Either way I think I’ll move out in the next couple of years. It’s something that I want to do – but I’m not going to rush into it.”
Tell me about how you manage your money?
“I don’t have a budget. Each time I get paid I transfer money across to an online savings account … but usually I end up spending it on clothes, going out, and holidays!”
THE MOTHER
Michelle is 59 and has seen her oldest daughter move through higher education and be partnered off – and is now left with only her youngest, Gabrielle, at home. She is a semi-retired teacher who is looking forward to the future where she can travel more and work less.
Why do you let Gabrielle live at home now that she has a full-time job?
“There’s actually no reason for her to move out at the moment.
“We think it’s important that she pays us some board – many of my friends don’t charge their kids anything, and even pay their mobile phones!
“I feel that we’re helping Gabriel get off to a good start, and I know she appreciates it very much.”
Do you enjoy having your child at home?
“We do enjoy having her here – and it’s nice to have young people around the place when her friends come round. Actually, that’s one of the reasons we don’t mind her living here – she’s hardly home!”
Does it impact your retirement savings and strategy?
“No, not at all. Although the size of the house we have does impact us financially.
“We have a big house in the suburbs that costs a lot to heat and keep clean. But we’re in a transitional phase where we will be downsizing in the next couple of years – and Gabrielle is not included in those plans!”
WHAT PRICE AN EDUCATION?
While Michelle believes that she’s given her daughter a helping financial hand, let’s take a look at Gabrielle’s financial situation:
Despite having most of her living expenses subsidised, all that Gabriel has to show from the $250,000 she’s earned (gross) over the past five years of her working life is $4,000 in savings and an $18,000 car loan debt.
Like most parents, Michelle made sure she provided a good education for her daughter. Yet by being sheltered from the real world of rent, bills and financial responsibility, Gabrielle hasn’t receive a good education in finance.
God knows I’ve met enough poor doctors and lawyers in my time to understand that a high income doesn’t necessarily equal wealth. Real financial security comes from developing the right behaviours when you’re young – and it’s usually real world experience that’s the best teacher.
What’s your view?
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17 comments
My Dad – who was not a hard or unfair man – always said you don't do anyone favours by being too soft on them. Responsibility is part fo the learning process.
GM
My sister's in the same boat, but she's 33. Mum and sister both rely on each other as my mum doesn't have a drivers licence. Some one please help?! she's taken over the whole house (master bedroom w/ensuite, lounge/dining, spare bedroom for her clothes) for $140/week (inclusive all bills, meals, and little lunch packs to take to work and cleaning), to make matters worse It's clear that I'm not welcome when I come over for visits esp. when I encroach into her territory (lounge/dining).
Hi Scott – I'm 24… have lived out of home since I was 18. I now live in North Melbourne, earn significantly less than Gabrielle and have more savings than her in my hand. I'm debt free and still head out every weekend with my friends for beers.
I'm about to start my own business and won't have to borrow any money from the bank because I bought a house when I was 21, renovated it and sold it off recently for a profit. This profit will fund my new business venture entirely.
'nuff said.
Chris Walsh, you are one clever cookie!
Definitely agree with your views. It doesn't teach independence or how real life really is. It's great that they do charge some board, but without any other overheads how the heck can she blow $70K a year – and not even own her car. Good money management is something that has to be taught or learnt. It doesn't come naturally to many.
I find it unbelievable that anyone working full time and nearing their mid twenties still lives at home. I moved out when I was earning 40K, Gabrielle earns 70K and doesn't budget and only has $4000 in savings? That is outrageous. Some of my friends are in their late 20s and are still living at home, and I laugh when they say they are finding it difficult to save. I don't know what is so hard about it when you don't have gas, electricity, grocery, internet bills or rent. I'd be embarrassed to be Gabrielle. She needs to grow up. In saying that, I think these 'kidults' are afraid of growing up and of responsibility.
G'day Scott,
I bought and read “The Barefoot Investor” when it was first released and have been a fan of yours ever since. I'm 33 now, but I was a “Kidult” until I was 26, I'm glad I did, and I'm pretty sure my parents feel the same way.
I was working full-time from 18 and didn't go to uni into I was well into my 20s, which I then did part-time, whilst continuing to work full-time.
I paid “board” from the time I got my first part time job at 16, when I was in year 11, and it increased over the years, in line with my salary. Mum and Dad had a big house, and I always pulled my weight with cooking, cleaning, mowing the lawns, helping Dad fix the roof, etc.
I have kept track of every dollar I earned, and what I spent it on, ever since I got that first job at 16, initially in excel spreadsheets, and subsequently in Quicken Personal.
Living at home gave me the chance to study whilst working full-time, do a little bit of traveling (but no 6 months overseas jaunts unfortunately) and pursue numerous hobbies (snowboarding, motorbike and mountain bike racing, among others), but I don't feel like I was bludging off my parents at all. By the time I left home, I owned (outright) a reasonably new Subaru, a brand new Honda motorbike, a large share portfolio and carried no debt whatsoever. I had also owned and sold an investment property and used the profits to started my own IT consulting business.
I think my extra years at home set me up for life financially, and now that my parents are nearing retirement, I fully intend to repay the favour.
You've never met me personally, but I believe that I am one “Kidult” who is far better off for my “extended stay-over in suburbia”!
Gabrielle is fortunate, all she needs is for some sage advice, go to it Scott! Advice her to save, save save.
I was in the same boat 27 years ago, my parents said “save or pay rent” I chose to save and bought and paid off my own home by the time I was 28
With two daughters living away from home, I have to say they learned more financial responsibility after they moved out. Living at home is a “sheltered lifestyle”.
My advice – Gabrielle should at least pay market rent, and put it in a savings fund Michelle – this would be a bit of assisted savings.
'Kidults’ – When Should They Move Out? – you know, I think its nobody's business really as long as both the parents and kids are OK with the arrangement!
I agree with you in that I don't think parents are doing their kids a favour by absolving them of financial responsibility (eg. paying phone bills), and I do believe if there are adult wage earners in the house, they should all contribute according to their means.
I am in my mid 30s and “still” live at home – just terrible, I know. I always end up having to justify myself when people look sideways at me. In large part its because I paid university fees upfront, and then gave away five years of my labour as a full time volunteer in my 20s. I am now in a well paid job, but my plans/attempts to buy my own place have gone belly up with the GFC. I have money invested that I can't touch, at least until it has recovered the original value it has lost. So its either give up on that dream when I am so close, go and pay high rents and forget about saving much again, or stay at home a bit longer.
I have a very good understanding of budgeting and saving, and am in every other way independent. My living at home is balanced out by the fact that my retired parents get extra income by way of board, and things I buy for them and the household that they would not buy for themselves.
It should be pointed out that this cuts both ways – there are drawbacks to 'still' living with your parents too, as a young person. On the upside, you can live more co-operatively, life is often more enjoyable and not so hard (depending on how you get on with your parents, I guess!). My divorced friend lives on her own, comes home to a dark cold house, struggles to pay a mortgage on a single income, and feels lonely. I come home to people sharing a meal and talking about the day's events, doing the dishes, playing with the dog and having a giggle. I know what I would prefer!
I think everyone deserves a support network, and – provided the financial arrangements are fair and the relationship is adult/adult, not parent/child – who cares whether its a partner, a flatmate or parents/other family members?
Before I was legally allowed to work (at 14) I made money taking on odd jobs around the neighbourhood. At 15 I started working, and did so all through high school (inc exam time) and during uni. I generally had 2-3 jobs throughout uni.
I am financially literate and know where my money goes.
I am 30 and live at home. I pay as much in rent/living expenses as I would if I was living outside of home.
I understand that a lot of 'kidults' freeload off their parents, but I get really annoyed when people make assumptions and generalisations about people living at home.
Sounds like this Little Princess needs to adjust her tiara and get a taste of real life – just like the rest of the peasants!
10 years ago when i turned 18 my parents moved overseas- yes thats right they took off backpacking for 18 months- so i was forced to move out- i supported myself through Uni- two degrees and bought a house during my second degree which i later kept as an investment and bought another house closer to the CBD. I am thankful my parents left as I had to stand on my own feet and realise rent money is dead money. I have recently sold the investment to allow us to have extra cash whilst we start a family but even with that sale we are sitting on 200k in equity in the house we live in yet friends i went through school with who earn double what i do live at home and have car loans etc and nothing in the bank. I guess my dad (who is a banker) taught us well and the forced eviction which seemed so harsh was a brilliant experience for them and a great learning experience for me. The one thing I would say is if you want to buy a house anyone can do it- I earnt 35k a year when i bought my first house- it was a tiny three bedder on the train tracks 60k's out of the city but I made 50k off it in 2 years- which has enabled me to move closer to the city and live in the area I want.
I'm the middle child of three, and two of us aren't “kidults”. My older sibling and I both moved out of home around age 18-19 (we're now in our mid to late 20's), and are now far better financially educated than our younger sibling, in their mid 20's, who still lives at home with mum & dad.
While I never really had a choice to live at home, due to financial and geographic reasons, I still think it is up to the individual to decide how financially savvy they are going to be, regardless of whether they are “kidults” or not. I know people from both categories who have made great financial choices. Similarly, I know people from both categories who have made some absolutely shocking financial decisions.
What I HAVE noticed, however, is that non-kidults tend to 'bounce back' better, since they don't have the safety net that comes with living at home. I'm not a kidult, and even though I would have saved a bucketload if I'd stayed at home, I'm glad I didn't. For my future's sake.
I'm the middle child of three, and two of us aren't “kidults”. My older sibling and I both moved out of home around age 18-19 (we're now in our mid to late 20's), and are now far better financially educated than our younger sibling, in their mid 20's, who still lives at home with mum & dad.
While I never really had a choice to live at home, due to financial and geographic reasons, I still think it is up to the individual to decide how financially savvy they are going to be, regardless of whether they are “kidults” or not. I know people from both categories who have made great financial choices. Similarly, I know people from both categories who have made some absolutely shocking financial decisions.
What I HAVE noticed, however, is that non-kidults tend to 'bounce back' better, since they don't have the safety net that comes with living at home. I'm not a kidult, and even though I would have saved a bucketload if I'd stayed at home, I'm glad I didn't. For my future's sake.
I had a boyfriend who was 26 and still lived at home with his mum doing everything for him. When we moved in together it lasted only a couple of weeks as he couldn't do anything such as washing his clothes, etc and expected me to wait on him hand and foot. My next partner had moved out at 20 and lived independently for the past 15 years and he was very capable – more so than me!!!
I dissagree with this sweeping generalisation. I am 27, and have moved back home after several years working and studying overseas, as a means of saving some money. I pay a small board ($400/month) and help out around the house, and in the year I have been home I have managed to save $20,000 – at least $10,000 of which I put down to the ‘helping hand’ of my parents. For me, living at home is purely economic (although it is only made bareable by the fact I get along excellently with my parents), and because of this, it is my primary motivation for saving. In short, living at home has made me far more financially aware, because it is the goal of saving money that is keeping me at home.