By: Old Mutual
Across the world, tough economic realities are forcing young adults to move back home. In the US, 52% of 18 to 29 year olds were living with their parents in July, compared to 47% in February, according to a Pew Research Center survey.
“In South Africa, about 42% of 18 to 34 year olds were still living at home in 2018, according to our latest research and we anticipate that situation will be exacerbated by the impacts of the Covid pandemic,” says Karabo Ramookho, Strategic Retail Marketing Manager for Old Mutual.
“And Millennials’ finances seem to be hardest hit, fuelling expectations that many of them will return home to live with their parents, as we’ve seen happening abroad,” she adds.
84% of South African Millennials indicated their household incomes have been negatively impacted by the pandemic, compared to the global average of 76%, according to a recent global report by TransUnion.
“With the shrinking job market as well as continued salary cuts, young adults’ ability to maintain their independence has been severely impacted by the pandemic,” she adds.
If you’ve said goodbye to your kids and are content in your empty nest, it will be quite an adjustment for all if they do come knocking. But with proper planning and some ‘rules’, it can be a win-win situation for everyone.
Karabo shares some tips to help you navigate this new-normal:
1. Make sure everyone contributes their share
If your children move back home and are still working, chat to them about contributing to the household’s expenses. You can ask them either to pay ‘rent’ or contribute towards covering the increased expenses. Where possible, agree on a household budget. Also revisit your own budget and see if you are able to make any adjustments. Openly communicate with your children if you are unable to cater to some of their needs.
2. Enjoy their company and tech help
Living with your adult children again can work brilliantly if it’s a symbiotic relationship, and you do things to help each other. For example, they can help you with maintaining the house, keep you company on lonely days and even assist with your tech needs, that’s if you are a little bit technologically challenged.
3. Ensure you have a holistic financial plan
Make sure you have a financial plan in place that prioritises all your financial needs, including your long-term goals like saving for retirement. Your children moving back shouldn’t necessarily put a dent in your future financial wellbeing, depending on their and your circumstances.
Your financial plan should make provision for when you are sick and unable to work, as well as the possibility of retrenchment. Also consider leaving a legacy for your loved ones to help them financially when you are no longer around. Still have debt? Prioritise paying it off. A good financial adviser should be able to help you in drawing up a plan that looks at your risk and retirement needs, as well as a good debt busting plan.
4. Draw up a will and prioritise estate planning
While nobody really wants to dwell on their passing one day, it’s important to do proper estate planning and have a will in place for when the inevitable happens. This will ensure that your assets will be distributed according to your wishes and that the people you love will benefit.
It is important to keep a file with your will, bank accounts, policies, as well as your passwords in a very safe place that only someone you trust will have access to when you die. Remember that cryptocurrencies can only be accessed via passcodes. If the password goes missing, those investments could be permanently lost, so guard them very, very carefully.
Even if you’re comfortable discussing your financial matters with your children, it’s still a good idea to consult an accredited financial adviser who will be able to help you with your financial planning and your will.